Annual Report 2011-2012

LOVE
A N N U A L
C O M M E R C I A L
a story of
R E P O R T
C R E D I T A N D
2 0 1 1 - 2 0 1 2
F I N A N C E P L C
a story of Love
At Commercial Credit, its serious business to love and care. The values that guide us in our daily work are firmly entrenched in our corporate culture and philosophy. Love and care permeate our every relationship: from the way we empower our people to how we care for our customers and the respect we show our business partners. In so doing, our engagement with our many stakeholders transcends the ordinary to become truly precious and mutually valuable. In the pages that follow, you will read about the transformation of Commercial Credit into a dynamic listed entity, our benchmark performance and outstanding results, our strong governance and risk management framework, our valuedriven culture and how we touch the lives of thousands of people. This is the story of love, the Commercial Credit way.
COMMERCIAL CREDIT AND FINANCE PLC ANNUAL REPORT 2011/2012
our shared values

instilling values
We make every effort to ensure that the culture within Commercial Credit and Finance PLC is steeped in the values that we espouse. Several events were held during the year to reinforce these values among our employees. The Companys Value Day was held on the 4th of March 2012 at the BMICH with the participation of the entire workforce. A detailed presentation was made by the CEO explaining the principles behind the values and their relevance and importance. It was instilled in the employees that the five values should be the basis of all their interactions both inside and outside the organization. The days events also included speeches by the Chairman of the Company, the Working Director and several other distinguished guest speakers. Mini dramas written and directed by popular teledrama personalities carrying the core message of each of these values were staged in which the acting talents of employees of Commercial Credit were displayed.
the values we hold dear to our hearts....

The values we value and their meaning to us are given below:
loving and caring

Commercial Credit defines love as the silent sacrifice made or the extra mile travelled to make others happy and uplift their lives. Those who love automatically feel happy and satisfied, and the feeling of love remains forever, cherished throughout life. Caring energizes everyone and benefits of true care and appreciation are immeasurable; sincere appreciation is one of the deepest needs of human existence and making someone feel good releases reservoirs of positive energy.
integrity and trust

We believe that trust is the key to every relationship. It determines how relationships begin and grow; and swiftly establishes positivism. Integrity means, having the courage to do the right thing even when under pressure; it is about standing steadfast in ones beliefs, intents and principles.
learning and development

Learning at Commercial Credit is characterized as the process of renewing and enhancing the Physical, Emotional, Intelligent and Spiritual dimensions, which in turn ensures personal growth. Learning and development is the single most powerful investment that one can make and is a continuous process in the achievement of effective, efficient and sustainable results. By encouraging an environment which strongly believes in a culture of learning and development, Commercial Credit strives to be the best in every single activity that it engages in.
synergy and team work

Commercial Credit believes that Synergy creates fresh untapped alternatives which values and exploits the mental, emotional and psychological differences between people; recognizing that strength lies not in similarities but in differences. A team combines individual strengths with a shared commitment to perform towards a common goal and strategic destination.
think win-win
Win-Win is one paradigm of human interaction and we believe that it arises from a character of integrity, maturity and the abundance mentality. Life is a co-operative arena where human interactions are based on mutual benefit and supportive systems. Additionally a culture of Think Win-Win is embodied in agreements that effectively clarify and manage expectations as well as accomplishments.
The highlights of the Value Day included the institution of a Value Policy, the unveiling of the Companys Theme Song, Value Oath and the Value Badge, and the introduction of a Value Register. These initiatives were directed towards the inculcation of a value driven culture.
The RVCs are appointed by the CVC and are scheduled to meet once a month or more often if necessary. Appointees to the CVC and RVCs have a one-year term with members being re-elected or replaced in the best interest of the Company.
value policy
The commitment of Commercial Credit towards the Shared Values is embodied in the Value Policy which provides guidelines and procedures on the development and implementation of a value-based organizational culture. The Policy contains a detailed framework and course of action to ensure the adherence of employees, by embedding the values in to the performance evaluation process. This policy applies to all employees of Branches and Service Centers of Commercial Credit and all activities carried out in any form. The Policy is overseen by the Corporate Value Committee (CVC), Regional Value Committees (RVCs) and the Head of Human Resources.
value song and value badges

The Value Song is aired at our offices at 8.35 am every day while employees are expected to wear their value badges. Employees were issued with Bronze Value Badges, which could be progressively upgraded to Silver, Gold or Platinum in recognition of their degree of commitment towards practicing the Shared Values.
value register
The Value Register will be a record of good conduct and excellence in living the Shared Values by employees, whether workrelated or otherwise. Each employee will maintain a personal value profile in the proposed internal social networking system of the Company, and when a noteworthy action by a colleague is observed, the Value Register will be used as the platform to communicate this action throughout the organization.
value committee
The aim of Value Committees is to implement policies and procedures that ensure effective adherence to the value framework, thereby conserving the culture of Commercial Credit. The Value Committees take two forms: the CVC and the RVCs. The former is appointed by the Management and is vested with the ultimate power and authority with regard to matters relating to values. The CVC meets once in three months before and after the Performance Evaluation.
value champions
Employees who embody the essence of the Shared Values will be identified as Value Champions. Initially employees will be shortlisted based on the 360 degree evaluation process. The shortlisted employees will be evaluated by the Management and the Corporate Value Committee based on the criteria given in the Value Policy and the Value Champions will be selected annually.
value policy - process flow

doer suggestor immediate supervisor rvc cvc
good conduct
report to the immediate supervisor of the doer
evaluate the conduct and forward the recommendation to rvc
assess and rank the conduct as bronz, silver, gold or platinum
approve or amend the decision of rvc
publish in system
Contents
Vision, Mission Purpose and Shared Values 7
Performance Highlights
Financial Highlights Events during the Financial Year 10 12
Corporate Governance
Corporate Governance Report of the Board of Directors on the Affairs of the Company Risk Management Report of the Board Audit Committee Report of the Remuneration Committee Report of the Board Integrated Risk Management Committee 58 71 74 76 77 78 79 80
Corporate Stewardship
Chairmans Message Forging ahead towards Our Vision... Chief Executive Officers Review Emphasising on our system of Shared Values The Board of Directors Profiles of the Board of Directors Corporate Management Profiles of the Corporate Management Senior Management 16 20 24 26 30 32 34
Directors Responsibility for Financial Reporting Directors Statement on Internal Control over Financial Reporting
Financial Statements
[Auditors Report] 85 [Balance Sheet] 86 [Income Statement] 87 [Changes in Equity] 88 [Cash Flow Statement] 89 [Notes to the Financial Statements] 90
Management Discussion & Analysis

Macro Economic Environment Non-Bank Financial Institutions (NBFIs) About the Company Operational Review Strategic Planning Information Technology Strategic Marketing Human Resources Product Portfolio Service Network Financial Performance Review Corporate Social Responsibility 38 40 41 42 42 43 44 45 48 50 52 55
New Accounting Standards issued but not effective as at Balance Sheet date Investor Information Value Added Statement Six Year Summary Notice of Meeting Form of Proxy Corporate Information
119 120 123 124 127
Glossary 125
purpose
To build leaders who uplift the lives of people by simple acts of love
vision
To be the most liberated Company admired for its people, partnership and performance
mission
To be a dynamic Finance Company which develops and nurtures leaders at every level of the organisation to serve society with passion.
shared values
n Loving and Caring n Integrity and Trust n Learning and Development n Think Win-Win n Synergy and Team Work
Performance Highlights
Financial Highlights
[Net Interest Income]
Millions (Rs.) 2000 1600 1200 800 400 103 0 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 127 170 0 2007/2008 702 1771
[Profit After Taxation]

Millions (Rs.) 800 640 480 320 160 29 7 2008/2009 45 2009/2010 60 2010/2011 2011/2012 758
[Shareholders' Funds]
Millions (Rs.) 1200 960 720 480 240 0 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 255 224 227 432 1190
[Total Deposit Base]

Millions (Rs.) 6800 5440 4080 2720 1733 1360 0 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 713 854 3840 6756
[Loans & Advances, Lease and Hire Purchase]

Millions (Rs.) 9000 7200 5400 3600 1800 797 0 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 1690 818 8648
[Total Assets]
Millions (Rs.) 12000 9600 7200 5350 4800 2400 0 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2271 1196 1389 10479
4435
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2011/2012 Rs.000 FINANCIAL PERFORMANCE Revenue Net Interest Income Profit Before Taxation Profit After Taxation FINANCIAL POSITION Shareholders Funds Total Deposit Base Borrowings Leases, Hire Purchase, Loans and Advances Total Assets KEY INDICATORS PER ORDINARY SHARE Earnings Per Share (Rs.) Net Assets Per Share (Rs.) Year end Market Value Per Share (Rs.) KEY PERFORMANCE INDICATORS Return on Average Assets (%) Interest Cover (times) Equity/Assets (%) Gross Non Performing Accomodations (%) Return on Average Shareholders Funds (%) PE Ratio STATUTORY RATIOS Liquid Assets (%) (Minimum Required 10%) Core Capital Ratio (%) (Minimum Required 5%) Total Risk Weighted Capital Ratio (%) (Minimum Required 10%) 14.40 10.34 10.99 13.70 2.55 11.36 3.3 93.47 4.60 3.48 5.46 16.00 1,190,424 6,755,714 975,536 8,647,621 10,478,823 2,765,859 1,770,998 1,084,546 758,287
2010/2011 Rs.000
% Change
1,254,391 702,488 244,366 60,094
120.49 152.10 343.82 1,161.83
432,137 3,840,492 388,552 4,435,050 5,350,179
175.47 75.91 151.07 94.98 95.86
0.28 1.98 Not Applicable
1,142.86 175.47 Not Applicable
6.41 1.60 8.08 4.92 18.24 Not Applicable
113.68 59.87 40.65 (32.11) 412.54 Not Applicable
11.65 5.25 6.76
23.67 96.95 62.57
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Events during the Financial Year

April 2011 July 2011 August 2011
Branch Opening - Badulla
1st Year Anniversary Celebrations of Microfinance
Microfinance Customer Motivational Programme - Kurunegala
May 2011
August 2011
Sirasa Cricket Carnival - Anuradhapura Ice Cream Dansala
Blood Donation Campaign- Kurunegala
September 2011
June 2011
Champions - Ceylinco VIP Cricket Tournament Main Financial Partner - Future Minds 2011
Finance House Association Sports Meet 2011
Commercial Credit and Finance
PLC
Listing on Colombo Stock Exchange
Branch Opening - Moratuwa
Branch Opening - Gampaha
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September 2011
October 2011
November 2011
Kite Festival - Gampaha
UDC Business Awards in 2011, MalaysiaBest Finance Company in Asia
Family Day - Dambulla Region
Branch Opening - Nugegoda
Champions - SLIM Business Awards, 2011
Sirasa Cricket Carnival - Embilipitiya, Ragama, Gampola, Matale and Matara
December 2011
Strategic Planning Launch
Family Day - Anuradhapura Region
October 2011
November 2011
Family Day - North and East Region
Microfinance Motivational Programme - Negombo
Microfinance Customer Motivational Programme - Kandy
Family Day - Gampaha, Negombo, Nugegoda
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December 2011
January 2012
March 2012
Sirasa Cricket Carnival - Finals
A Day out for Microfinance Customers and their Families - Leisure World
Value Day
January 2012
February 2012
Family Day - Head Office
Trip to India for Microfinance Customers Buddhagaya, Banares
Family Day - City Office
Trip to India for Microfinance Customers Velankanni Church
Family Day - Southern Region
Trip to India for Microfinance Customers Thirupathy Kovil
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Corporate Stewardship
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Chairmans Message
Forging ahead towards Our Vision...

It is with pleasure that I welcome you to the 29th Annual General Meeting of Commercial Credit and Finance PLC following the end of a financial year which has witnessed outstanding achievements. Commercial Credit has forged ahead towards our vision of becoming the most liberated Company admired for its people, partnership and performance.
Economic Review
The global economic climate continues to be under pressure from the European sovereign debt crisis, low demand and high unemployment in the US and pockets of social revolution, especially in the Middle East. As an emerging Asian economy, Sri Lanka is uniquely positioned in the global economy which grew by 3.8% in 2011, with 6.4% growth recorded by emerging and developing economies, while advanced economies continued to lag at a slow 1.6% growth. By 2020, Asia is expected to match the US and EU in contribution to global GDP, marking a shift of economic power from traditionally strong economies to the Asian bloc led by Japan, China and India. Sri Lankas post-war economic development continued apace during the year, although with some uncertainty returning during the last few months of the financial year. A general sense of optimism prevailed in Sri Lanka during the year with favourable employment and inflation indicators, despite a slowing down of investments. Infrastructure in all parts of the country is being developed at a rapid pace, the dividends of which will begin to impact businesses over the coming years. Our economy was one of the better performing across the world in 2011, recording a growth of 8.3%; the second consecutive year of 8%-plus growth. Towards the end of the financial year, trade deficit concerns led to a float of the rupee, import restrictions and an upward adjustment of policy interest rates. In April 2012, the International Monetary Fund released a USD 427 million tranche of its Standby Facility for Sri Lanka and it is hoped that the volatility experience at the beginning of the year would be stabilized in due course. The Central Banks mid-year projections set a GDP growth target of 7.2% for 2012, a downward revision from the 8.0% projected in January 2012.
The Company had an outstanding year with exponential growth in Income, Net Interest Income, Profit, Lending and Deposits
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COMMERCIAL CREDIT PLC. ANNUAL REPORT 2011/2012
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Given the customer confidence accumulated over almost three decades and the financial acumen gained by the Company over this period, I am in no doubt that Commercial Credit will continue serving the interests of all our stakeholders
The Finance Sector in particular experienced a successful year in 2011 with major financial institutions increasing their asset base from Rs. 6,578 billion in 2010 to Rs. 7,705 billion in 2011.The Non-Bank Financial Institutions (NBFIs) sector also showed healthy growth during the year; its asset base growing by 26% to Rs. 490 billion. NBFIs expanded their reach from 600 to 704 branches at year end.
Company Performance
Continued emphasis on the development of knowledge, skills and motivation levels of our people and a sharper focus on our five Shared Values together with the launching and companywide implementation of the Strategic Plan covering the period September 2011 to August 2014 had a significant positive impact on the results achieved. As mentioned earlier the Company had an outstanding year with exponential growth in Income, Net Interest Income, Profit, Lending and Deposits. This stellar performance was reflected in important indicators such as Net Interest Margin, Cost to Income Ratio, Non-Performing Accommodations and Return on Average Assets. The Company also maintains satisfactory levels of liquidity. In the context of the performance of the Company, the growth in our Microfinance activities has become a benchmark in the industry. Even though the growth of the economy has been revised as mentioned above, the rate of 7.2% is still quite healthy. Given this background Commercial Credit hopes to achieve the goals and objectives we have set for ourselves with the execution of our well-defined three-year Strategic Plan.
The Company continues to meet all its compliance obligations, both statutory and regulatory. The system of committees and other structures established to meet the required Corporate Governance practices have functioned well during the year with regular meetings being held, matters of importance being discussed and appropriate guidance and advice given to the management. The reports covering the activities of these committees are given in a separate section of this report.
Future Prospects
Given the customer confidence accumulated over almost three decades and the financial acumen gained by the Company over this period, I am in no doubt that Commercial Credit will continue serving the interests of all our stakeholders. New
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products will be introduced to the market that will offer fresh financial solutions to our customers, which we believe will bring them immense benefits. In this context we expect our Microfinance customers in particular to benefit from savings and loans products, which will be introduced in the coming year. Our strategy of location expansion will continue with the intention of offering convenience to a wider community and the introduction of innovative Information Technology is expected to produce benefits to both customers and the Company.
Appreciation
The Company has grown not only in size and profitability but also in terms of reputation and has reached exceptional heights during the year under review. At this juncture I wish to place on record the contribution of the former Chairperson, Mrs Vagdevi Fernando who stepped down from the Board during the year in compliance with the applicable CBSL regulations. Mrs Fernando assumed the leadership role of Commercial Credit in 1988 after the demise of her husband Mr Donald Fernando, the founder Chairman and Managing Director beckoned her to do so. Our sincere good wishes are with her. I wish to take this opportunity to congratulate Dr. (Mrs) Erasha Fernando, the daughter of Mrs Vagdevi Fernando who joined the Board in January 2012. My sincere appreciation is extended to my fellow Board Members, whose counsel and contribution have guided the Company to its current position of strength. In this context I am thankful to the Non-Executive Directors for their efforts in the various committees of the Board. Very special thanks are due to Director/Chief Executive Officer for his inspirational leadership, and to the Executive Directors and the able and dedicated management team for their leadership and drive towards excellence. I also wish to express my sincere gratitude to each and every employee of the Company for their continued devotion and efforts during the year. I must make particular mention of our loyal base of customers and depositors, and shareholders of Commercial Credit and Finance PLC for their faith and confidence in the Company and its management. In conclusion, I would like to state that the continuous efforts of employees at all levels of the Company, in inculcating a strong value driven corporate culture will drive the organization towards its fundamental purpose of uplifting the lives of people with simple acts love.
K J Cecil Perera
Chairman 20th August 2012
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Chief Executive Officers Review
Emphasising on our system of Shared Values

For Commercial Credit and Finance PLC, the year 2011/2012 was one of tremendous achievement and it is with a great sense of pride that I present this review to all our stakeholders. Multiple factors have enabled this achievement. Among them are the further empowerment of all our employees and their untiring efforts in all activities they undertake, the enhanced reach of our network and the highly effective Management Information System. I also believe that the great emphasis we place on our system of Shared Values in all interactions, contributed to our success. During the year we have made substantial investment in time and effort to communicate, discuss and reinforce these values among our people. The Commercial Credit Value Day, the launching of the Company theme song Hirugen Bihiwee, the several family days held, the value mentors appointed and the value badges worn by each of our staff are some of the practices we have used to inculcate these values deep in the hearts and minds of the entire Commercial Credit family. While we realize that the challenges we face in truly living these values in todays competitive business environment will not be easy to deal with, we will make the necessary effort towards this end. During the fiscal year 2011/2012 Commercial Credit attained a growth in Income amounting to 120% by increasing the figure from Rs. 1.2 billion in 2010/2011 to Rs. 2.8 billion. Further, over 150% growth in Net Interest Income was achieved in the fiscal year under review, i.e. from Rs. 702 million to Rs. 1.8 billion. Profit from Operations grew by over 300% to Rs. 1.2 billion, while Profit After Tax amounted to Rs. 758 million, which is a 12 fold increase of the figure for the preceding year. The asset base of the Company recorded a growth of 96% during the financial year to Rs. 10.5 billion, which is a critical indicator of the forward march of our Company. It is also pleasing to note the confidence the public has shown in our Company as reflected by the growth of our Fixed Deposit base from Rs. 3.8 billion at the beginning of the year to Rs. 6.8 billion at year end. With the excellent results achieved, financial performance indicators for the year have shown solid improvement. The Net Interest Margin has improved
The great emphasis we place on our system of shared values in all interactions, contributed to our success. It is also pleasing to note the confidence the public has shown in our Company as reflected by the growth of our Fixed Deposit base
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COMMERCIAL CREDIT PLC. ANNUAL REPORT 2011/2012
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Our performance over the year under review bodes well for an era of sustained growth and stability, and I am confident that in the years ahead Commercial Credit will reach the pinnacle of the non-bank financial sector in Sri Lanka
from 18.4% in 2010/2011 to 22.4% for the current year. Similarly other ratios and margins have also improved with Cost to Income ratio moving from 63% to 45%, Gross Non-performing Accommodations reducing from 4.9% to 3.3% and Return on Average Assets increasing from 6.4% to 13.7%. Further, our liquidity ratios and capital adequacy also showed a significant improvement. Our Liquid Assets Ratio improved from 11.7% to 14.4% as at end of the year under review. Tier 1 and Tier 2 ratios stood at 10.3% and 11.0% compared with the minimum requirement specified of 5% and 10% respectively. Microfinance has been one of the most successful areas of operation for Commercial Credit since the commencement of activities by the Company in this discipline just over two years ago. Catering to a total customer base of over 105,000 by year end, our Company has one of the highest Microfinance loan portfolios (Rs. 2.7 billion) in the country. Microfinance offers financial products to customers who are unable to access funds through regular commercial banking channels and cannot offer substantive collateral. I would specially like to mention the extensive personal development work we undertake as a part of our Corporate Social Responsibility program among our Microfinance customer groups in many parts of the country. While we make substantial investments in these activities, it is pleasing to note that by being active in this sector, we feel we are making a positive impact in uplifting the lives of a large number of people who are in many ways economically deprived. In recognition of our outstanding financial performance and the benchmark standards of service and operational excellence achieved by our Company, Commercial Credit and Finance PLC was named Best Finance Company in Asia at the International UDC Business Awards 2011, Malaysia. We are pleased at this recognition and feel that we have been able to place Sri Lankas NBFIs on the global map of award winning financial institutions. It is evident that we have attained unparalleled success since embarking on a new chapter of growth in 2009. As mentioned in our Annual Report for the previous year, we have launched and are in the process of implementing the Strategic Plan of our Company covering the three year period September 2011 to August 2014 under the title Winning Strategies A New Era of Excellence and Team Work. Conceptualised and developed internally with the involvement of all levels of the organisation, the Plan was vetted by international strategists, MTI Consultants. This Strategic Plan has been designed to increase our customer base, to provide them with an exceptional level of service and to fortify our strategic position in the finance industry of Sri Lanka.
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Employee empowerment has been one of our competitive advantages; our belief in the capability of our employees and their reciprocation through loyalty and effort has reaped tremendous rewards for the Company. As I mentioned earlier, we are inculcating a value driven corporate culture, with the entire team collectively contributing towards the propagation of our values, loving and caring, integrity and trust, learning and development, think win-win and synergy and teamwork. In parallel, we have also re-aligned our mission and vision with our corporate values to ensure a uniformity of purpose. This is reflected in the new wording of these statements as seen in this Annual Report. The Company has an intense focus on compliance with regulatory and statutory requirements and is developing a strong system of governance entrenched within the structure of operations. Risks inherent in the business have been diagnosed and are kept under constant review to ensure sufficient mechanisms of controls are employed for the effective management of such risks. The management framework, systems and processes of Commercial Credit are integrated with risk management mechanisms to ensure robust governance, which will ultimately contribute towards the continued stability and the creation of value for all our stakeholders. On behalf of the Company, I wish to thank the officials of the Central Bank of Sri Lanka for the guidance and assistance so readily extended. I would also like to convey my gratitude to the Chairman and my colleagues on the Board for the advice and guidance they have given me in steering the Company. My thanks and appreciation goes to Mrs Vagdevi Fernando, the former Chairperson of the Company for her guidance and support during her tenure of office. The high degree of commitment and professionalism demonstrated by our staff has been beyond expectation and was the driving force behind the outstanding results achieved by Commercial Credit. My sincere thanks are with each one of them. None of our achievements would have been possible if not for the continued trust and confidence of our depositors and the patronage of our customers. My heartfelt thanks are with them. In conclusion I would like to say that our performance over the year under review bodes well for an era of sustained growth and stability, and I am confident that in the years ahead Commercial Credit will reach the pinnacle of the non-bank financial sector in Sri Lanka.
R S Egodage
Chief Executive Officer 20th August 2012
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The Board of Directors

First Row From Left: Mr Cecil Perera, Mr Roshan Sanjaya Egodage, Mrs Geya Rasi Egodage, Mr Thirunavukarasu Someswaran Second Row From Left: Mr George Ginendra Hemachandra, Mr Susantha Pinto, Dr. (Mrs) Erasha Fernando, Mr Samantha Kumara Gunaratne
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Profiles of the Board of Directors

Mr Cecil Perera
Chairman/Independent Non-Executive Director
During a career spanning over 28 years as an Attorney-at-Law of the Supreme Court, Mr Cecil Perera has gained a high degree of expertise in all areas of the Law, including Corporate Banking, Leasing & Finance, Capital Market & Fund Management Services, Corporate Debt Financing Services, and Intellectual Property Advisory Services. Mr Perera joined the Board in March 2011. A well-respected figure, 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 Co. PLC as legal officer. He currently serves on the boards of Management Systems (Pvt) Ltd, Thilanka Hotels (Pvt) Ltd, Eurocenter DDC (Pvt) Ltd and Winall (Pvt) Ltd.
Mr Roshan Sanjaya Egodage

Director/Chief Executive Officer
Mr Egodage took over the reins of Commercial Credit in October 2009 following the takeover of the Company by BG Investments (Private) Limited. As Chief Executive Officer, he has been the driving force behind the Companys recent stellar success, charting a visionary course of leadership and growth. His success as a corporate strategist is due in part to his multi-disciplinary approach gleaned through high level exposure to diverse industries such as Engineering, Manufacturing, Plantations and Finance. Prior to taking over the stewardship of Commercial Credit, Mr Egodage held several senior management positions in the finance industry. He was appointed the Deputy Chief Executive Director of The Finance Co. PLC in 2006 with overall responsibility for its operations, while serving on the boards of several group companies. He was instrumental in leading The Finance Co. PLC to its highest ever profits in over 70 years of operation. Mr Egodage has previously been 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 at Kotagala Plantations PLC and General Manager Project and Planning, at Agalawatte Plantations PLC, overseeing the overall direction of the respective companies. He also held key positions of responsibility in companies including Central Investments & Finance PLC, Peoples Ventures and Ceylon Pencil Company and he currently serves on the boards of BG Investments (Private) Limited and BG Capital (Private) Limited. Having earned a BSc. Eng. (Hons) degree from the University of Peradeniya and initially embarking on a career in engineering, he then set his sights on a career in management, earning an 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.
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Mr George Ginendra Hemachandra

Executive Director
A founder Director of the Company, Mr Hemachandra is the Chairman of Hemachandras (Kandy) Limited, one of the oldest and best known jewellery businesses in Kandy. He also serves as 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 Commercial Credit to reach its current success.
Mr Samantha Kumara Gunaratne

Independent Non-Executive Director
Mr Gunaratne is an Independent Consultant in Energy Conservation and Management, and joined the board of Commercial Credit in August 2009. Mr Gunaratne has functioned in Senior Engineering positions in leading companies such as MAS Holdings and Brandix, as well as in the Sugar and Plantation industries. With over 22 years of experience in the fields of Engineering and Energy Management, he has participated in project teams and forums involved in the construction and commissioning of many mass scale manufacturing facilities for the Plywood and Textile Industries. He holds a National Diploma in Engineering Sciences specializing in Mechanical Engineering.
Mrs Geya Rasi Egodage

Executive Director
Mrs Egodage joined Commercial Credit as an Executive Director following the management takeover in December 2009. Presently she serves as a Director of BG Investments (Private) Limited, BG Capital (Private) Limited and R. D. S Bakers (Private) Limited. Mrs Egodage began her career as an Assistant Lecturer at the Department of Chemistry, University of Peradeniya. As her career advanced she collaborated in 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 (Private) 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 an Executive Director of Commercial Credit and is an integral component of the success story of the establishment. She holds a BSc. (Hons) Degree in Chemistry from the University of Peradeniya and a Post Graduate Diploma in Business Administration from the Open University of Sri Lanka.
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Mr Thirunavukarasu Someswaran
Mr Someswaran is a Chartered Accountant counting over 35 years in practice and recently retired from the post of Senior Partner of SJMS Associates, a firm of Chartered Accountants associated with Deloitte in Sri Lanka. He currently serves on the Audit Committee of the Institute of Chartered Accountants of Sri Lanka and Serendib Lands (Pvt) Limited. He also serves on the boards of Panasian Power PLC, the European Chamber of Commerce, Equity Based Community Support and Training, Business Council of Indonesia of the Ceylon Chamber of Commerce and is Vice President of The International Chamber of Commerce. Mr Someswaran joined the board of Commercial Credit in March 2011. He is a member of the Tax Faculty of the Institute of Chartered Accountants, Organization of Professional Associations, International Fiscal Association and Sri Lanka Institute of Directors. He is a fellow member of CMA, Sri Lanka and a member of its Governing Council.
Mr Susantha Pinto
Mr Pinto started his career as a Trainee Planter in 1986 with Balangoda Estate, Sri Lanka State Plantation Corporation and later functioned as Assistant Superintendent and Superintendent in leading plantation companies in Sri Lanka. He served Solar Electric Light Company USA as the Director Operations during which he contributed in many ways towards the improvement of operations such as finance, after sales service of Renewable Energy - Solar Photo Voltaic in Sri Lanka, India and Vietnam. He was the Chief Executive Officer/ Director of Ceylinco Renewables (Pvt) Limited for a period of two years and was the Chairman of Green Earth Group. He joined the board of Commercial Credit in May 2011. He holds a Diploma in Plantation Management.
Dr. (Mrs) Erasha Fernando

Having completed her MBBS in the North Colombo Medical College in 1994 Dr. (Mrs) Erasha Fernando obtained an MSc. in Medical Administration from University of Colombo in 2009 and has a total of almost two decades experience in medicine and medical administration. She joined the board of Commercial Credit in January 2012.
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Corporate Management
First Row - From Left: Mr C J Jayathilake, Mr A D Samuel, Mr C P Wickramasinghe, Mr K L A Senevirathne, Mr R S Egodage, Mrs G R Egodage, Mr L G S Perera, Mr J L A S Priyankara, Mr M A D J Deshapriya, Mr S Nanayakkara Second Row - From Left: Mr S S H Gunawardena, Mr A S Ranaweera, Mr D G Jayaratne, Mr D D R Udugama, Mr P A A D Pitigala, Mr A S Manawadu, Mr P D Salwathura Not present in the picture: Mr G G Hemachandra
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Profiles of the Corporate Management

Mr R S Egodage
Director/Chief Executive Officer
Please refer to profiles of the Board of Directors
Mr C P Wickramasinghe
Deputy General Manager Information Technology
Mr Wickramasinghe has served Commercial Credit since 1993. Reputed as a skilled and qualified professional among his industry peers, Mr Wickramasinghe leads Commercial Credits IT department, which boasts of having one of the most effective IT systems among finance companies in Sri Lanka. Mr Wickramasinghe is a Chartered IT Professional and a member of the British Computer Society MBCS CITP. He has an MSc. in Information Technology from Charles Stuart University, Australia and in addition holds IT Diplomas from IDM, Sri Lanka and ACS, Australia and PGD from BCS, UK.
Mrs G R Egodage
Executive Director
Mr G G Hemachandra
Executive Director
Mr L G S Perera
Chief Operating Officer
Mr Perera is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka (FCA). He is also a Fellow Member of the Institute of Certified Management Accountants of Sri Lanka (FSCMA) and an Associate Member of the Institute of Certified Management Accountants of Australia (CMA). He has also completed the examinations of the Institute of Internal Auditors, USA. Mr Perera commenced his career at one of the leading Sri Lankan audit firms being promoted to Partner in 1983 subsequent to completing the ICASL final examinations at which he was awarded several prizes including the First-in-Order of Merit (Top of Batch) prize. He has an over-all experience of over thirty years in external and internal auditing, financial management, financial consultancy and general management in leading organisations in Sri Lanka and abroad including several years in a leading Swiss based multinational company while serving in Saudi Arabia. He was the Chief Executive Officer of I D Lanka Limited in the alcoholic beverages industry for a period of 8 years during which tenure this company showed significant improvement in results in both market share and profitability. In addition Mr Perera was the General Manager Finance at Agalawatte Plantations PLC and the Chief Operating Officer of Millers Brewery Limited. He is also a Director of bPotential (Private) Limited, a start-up venture in business process outsourcing. He was a member of the Council of the Employers Federation of Ceylon (EFC) from October 2008 to February 2010 and was the founder Chairman of EFCs Employers Network on Disability. Mr Shriyantha Perera joined Commercial Credit in June 2012.
Mr K L A Senevirathne
Deputy General Manager Operations
Mr Senevirathne is a strong motivator and his vision of empowerment has made immense contribution towards the development of the Companys ethos. Mr Senevirathne has over 25 years experience behind him and has previously worked at Kalani Cables Limited in an Executive capacity. He then joined The Finance Co. PLC and rose to the position of Assistant General Manager - Operations where he excelled being in charge of a large country wide branch network.
Mr J L A S Priyankara
Deputy General Manager Operations
Mr Priyankara is responsible for a wide range of the Companys day to day operations as well as holds joint responsibility for implementing its strategic initiatives. He also has the overall responsibility for real estate activities of the Company. Mr Priyankara brings with him over 22 years of experience in the industry, which enables him to discharge his duties with the highest levels of efficiency and skill. His extraordinary skills in working with teams and developing strategies have been vital to the Companys current progress. He holds a BA (Hons) from the University of Ruhuna and an MBA from the University of Manipal, India.
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Mr A D Samuel
Deputy General Manager Corporate Planning
Mr Samuel joined the Company in 2010 and brings with him 17 years of diverse experience and knowledge, including a stint at CEO level. He was previously engaged in the plantations industry where he held senior management positions at companies such as Mackwoods Plantations (Pvt) Ltd., Aspic Plantations (Pvt) Ltd., and Deranayigala Plantations (Pvt) Ltd. He was also a Director of Next Finance. Mr Samuel holds an MBA from the University of Peradeniya and is an Associate Member of the National Institute of Plantation Management (AIPM), as well as a Fellow of the Chartered Institute of Management Accountants, UK (FCMA).
Mr M A D J Deshapriya
Chief Financial Officer
Mr Deshapriya brings in a high level of experience and expertise gained from a career spanning over 15 years in the field of finance. Prior to joining Commercial Credit he served as General Manager of The Finance Co. PLC for several years, overseeing the finance function. He has wide experience in financial accounting, budget development and forecasting, treasury management, tax planning and overall business management and leadership. He also has wide experience in the auditing field. He is a Fellow Member of the Society of Certified Management Accountants of Sri Lanka and an Associate Member of the Institute of Chartered Accountants of Sri Lanka.
Mr S Nanayakkara
Deputy General Manager Recoveries
Mr Nanayakkara has over 29 years experience in the field of finance, particularly in the areas of credit evaluation, recoveries, credit management and administration. He was previously employed at The Finance Co. PLC where he provided leadership to branch managers and centre managers in achieving consistent growth in investments and profitability while prioritising recoveries. He was also a member of the Credit Committee and the Product Development Team at The Finance Co. PLC. Mr Nanayakkara has a Diploma in Credit Management and has completed IAB, UK.
Mr C J Jayathilake
Deputy General Manager Marketing
Mr Jayathilake has a high level of experience both in Sri Lanka and overseas, with many assignments undertaken on behalf of the Ceylinco Group. During his tenure as Country Manager of Ceylinco Consolidated Overseas Limited Dubai, UAE, he was instrumental in attaining many operational achievements. He was later appointed Regional Manager- Middle East & Europe for Ceylinco Express Remittance Co. (Pvt) Limited where he collaborated in many research projects. He also served Frostaire Industries (Pvt) Limited as a Head of Sales making use of his leadership capabilities, knowledge and experience.
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Senior Management
First Row - From Left: Mr W N Weerakoon, Mr B G W M Ariyapala, Mr H G Piyadasa, Mr A C De Silva, Mrs R A P Wijethunga, Mrs H M P S Herath, Mr K D S Sujeewa, Mr S G Thanthrige, Mr R M A S Rathnayaka, Mr M N Kariyawasam Second Row - From Left: Mr H V S Weerakoon, Mr D S M Wijesinghe, Mr C M Stewart, Mr E A S Perera, Mr W T I P Kumara, Mr D M L K Dissanayaka, Mr N H Suwandaratne, Mr K R N S Bandara, Mr H L L Chaminda, Mr G R Abhaya kumara, Mr A T A De Alwis, Mr W A M L Perera Third Row - From Left: Mr G T C S Jayamanne, Mr A M S S Attanayake, Mr M S Jainudeen, Mr M L D N Y Madawala, Mr M F Devananda, Mr W L B Attanayake, Mr I G J P K Gamage, Mr K G S C Ranasinghe, Mr W M D W Mallawarachchi Not present in the picture: Mr M K Seelagama, Mr S Thirukumaran, Mr P K N Priyashantha
34
35
36
Management Discussion & Analysis
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Macro Economic Environment

The global economy slowed down in 2011, with sovereign debt concerns in the Euro Zone, continuing unemployment and low consumer demand in the US, the effects of a debilitating earthquake and tsunami in Japan, and the Arab spring civil unrest in the Middle East. Rising commodity prices had an impact on inflation, to which even the stronger emerging economies were not immune. The slower than anticipated recovery has prompted the International Monetary Fund to forecast global economic growth at 3.3% for 2012, with Asia anticipated to grow by around 6.4%. Inflation for the year 2011 was 7.2%. Increased domestic supply helped offset price hikes in global commodity markets thereby enabling inflation to remain at single digit level throughout the year.
[Movements of the CCPI (2006/07=100)]

% 10 8 6 4 2 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2010 2011 Annual Average % Change 2012 Year on Year % Change 0
[Sectorial Classification of GDP]

Agriculture
Indusrty
Services
Source : Annual Report of CBSL 2011
Economy 0 5 2010 10 2011 15 20 (%)
The Central Bank of Sri Lanka revised the repurchase and reverse repurchase rates by 25 and 50 basis points respectively in January 2011 and were made to stand at 7% and 8.5% throughout the year which were then revised to 7.5% and 9.0% in February 2012.
In Sri Lanka, the post-war recovery continued in 2011, with the economy recording a growth of 8.3%, due to strong domestic demand, improved investor confidence, and investments in infrastructure. The industry sector grew by 10.3%, the services sector by 8.6% and the agricultural sector by 1.5%. Aggregate demand was increased by 11.6% as a result of the amplified investment activities and increased domestic consumption. Unemployment reduced substantially from 4.9% in 2010 to 4.2% in 2011 owing much to the rise in employment in the micro entreprise sector, which opened opportunities for companies such as Commercial Credit to explore new markets.
[Repurchase and Reverse Repurchase Rates]

(%) 12 10 8 6 4 2 0
[Unemployment]
(%) 6 5 4 3 2 1 0 2007 2008 2009 2010 2011
2007
2008 Repurchase Rate
2009
2010
2011
Reverse Repurchase Rate Source : Annual Report of CBSL 2011
The focus of external trade was on value addition and diversifying export markets. Export income grew by 22.4% to USD 10,559 million with industrial exports recording a substantial rise of 31.1% led by apparel, while agricultural exports grew by 9.6%. Import expenditure grew by 50.7% from USD13,451 million to USD 20,269 million in 2011 mainly due to increased expenditure on investment goods and intermediate goods on the back of more domestic demand for machinery, building materials and transport equipment.
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[Imports and Exports]

Millions (USD) 20000 16000 12000 8000 4000 0
2007
2008 Exports
2009 Imports
2010
2011
The performance of the Colombo Stock Exchange declined during the year, despite considerable funds attracted through 12 Initial Public Offerings and 22 Rights Issues. A slew of measures including restrictions on broker credit and bank lending and net foreign capital outflows had a negative impact. Treasury Bill rates continued to be stable during the initial two quarters of the Companys financial year under review and then rose during the last two quarters. 364 day Treasury Bill rate was recorded at 11.3% as at the end of the financial year 2011/2012. The movements of the Treasury Bill rates are depicted in the following chart.
[Treasury Bill Rates]

(%) 11 10 9 8 7 6 Mar 2011 91 Days Jun 2011 Sep 2011 Dec 2011 182 Days 364 Days Mar 2012
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Non-Bank Financial Institutions (NBFIs)

The NBFI sector maintained the growth momentum during the year 2011 where considerable improvements were witnessed in asset quality, profitability, capital, deposit base and credit growth supported by enhanced depositor confidence and economic expansion. An enhanced supervisory role was played by the Central Bank of Sri Lanka during the year under consideration and new Directions were introduced in ensuring improved Corporate Governance and transparency in the sector.
[Total Accomodations - by Product]
Loans Against Deposits Loans Against Real Estates Pawning Advances Other Secured Loans & Advaances Hire Purchase Finance Leasing Others
The number of NBFIs stood at 55 at the end of 2011, with a total asset base of Rs. 490 billion, an increase of 26% over the previous year. The total accommodations of the sector grew by 46% to Rs. 388 billion during the year. Deposits from the public stood at Rs. 186 billion which was 38% of total liabilities and equity while borrowings accounted for 35% of this figure. Capital funds of the NBFI sector demonstrated a substantial growth of 57% compared to the growth of 9% recorded in 2010, mainly backed by continued profitability and the revival of distressed companies.
[Non Performing Accommodations]

(%) 10 8 6 4 2 0
2007
2008
Gross NPA
2009
Net NPA
2010
2011
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About the Company

The Company traces its beginning to 4th October 1982, when it was established as Commercial Credit Limited in Sri Lankas hill capital. It was re-registered as a Public Limited Liability Company under the provisions of the Companies Act No. 7 of 2007 and the Finance Business Act No. 42 of 2011. The shares of the Company were listed on the Dirisavi Board of the Colombo Stock Exchange on 1st June 2011. With effect from 17th May 2012, the Company changed its name to Commercial Credit and Finance PLC in compliance with the requirements of the Finance Business Act No. 42 of 2011. Originally established with the prime focus on agricultural lending, the Company inculcated a strong process and system driven culture, the benefits of which are being reaped today. The Company underwent a change in the majority shareholding in October 2009 resulting in the infusion of a new management team which has driven the Companys transformation into a modern competitive entity. A well-developed three year Strategic Plan, the execution of which is resulting in a strong corporate image, an empowered workforce, innovative products and modern infrastructure within the Company. This has led to a strong growth in both the lending and deposit portfolios, at levels unprecedented in the sector. The extended network of business locations spread across major districts of the country that Commercial Credit has, is a further contributing factor in the Companys performance. The future success and the growth of Commercial Credit will be based chiefly on its ability to further entrench an enriching culture with selfmanaged and dedicated employees empowered to perform to their optimum while being guided by the five values of the Company.
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Operational Review
Strategic Planning
Strategic planning is the framework established to guide the organization towards its Vision and Mission. The planning cycle which spans a period of three years defines initiatives, milestones and key steps necessary to be achieved during the planning period. The Strategic Plan will be recast periodically covering a new planning cycle. In constructing the Strategic Plan, the Company has collaborated with international strategy consultants, MTI Consultants and arrived at a well defined strategic course for three years. The Plan is branded Winning Strategies A New Era of Excellence and Team Work. Under the Strategic Plan, key operations of the business have been categorized as Value Flow, while the supporting functions are termed Enablers. The activities under the Value Flow and Enabler functions are structured so that each function performs identified key steps which will accomplish milestones which in turn lead to the attainment of initiatives. Currently in its first year of implementation, it is already clear that the effect of the Strategic Plan is beginning to get positively reflected in the performance of the Company. The Company has harnessed the professionalism and collective industry experience of its workforce to execute its strategies and achieve extraordinary growth during the period under review. The basic structure of the Strategic Plan is shown in the diagram below:
Product Development & Management Channel Development & Management
Strategy, Performance Management & Organizational Leadership Office Environment
Office Environment OfficeProcess Environment Supply Chain
Value Flow
Enablers
OfficeCulture Environment Finance Corp. Office Communications Environment People
Customer Conversion
Service Delivery
Collections
Office Compliance Environment Risk Technology Office Environment
MTIs 8S Model
SCOPE SCAN
SIGHTS
STRATEGY
STRUCTURE
SYSTEMS
SOCIAL RESPONSIBILITY
STAFF
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Information Technology
Commercial Credit being one of the first entities among NBFIs to implement a web based ERP system with intranet and extranet capabilities could be considered a pioneer in Information Technology (IT) in the sector. This has facilitated seamless, user friendly, timely, secure and accurate information sharing among clients, employees and other external stakeholders. On this solid platform Commercial Credit has constructed a well-defined IT roadmap which is currently being pursued focusing on important areas such as research and development, connectivity and collaboration, governance and risk, service delivery and consolidation. This would enable a flow of benefits including improved information exchange, more efficient compliance with regulations and industry standards while ensuring improved value addition to the business. providers for fault tolerant connectivity and centralized voice services. The video conferencing system is evidence of this pursuit. Intranet based collaboration will be introduced shortly. In realizing synergies through connectivity, initiatives will also be taken to utilize the internet and social networking to improve communication and collaboration among all stakeholders.
Governance and Risk

In keeping with identified risk management requirements, Commercial Credit has initiated plans during the fiscal year under review to overhaul the Information Security Policy (ISP) and Disaster Recovery Plan (DRP) with due consideration to the ever changing threat landscape. In keeping with good governance practices, the entire IT infrastructure was audited by a competent independent third party. The related recommendations have mostly been implemented. The Disaster Recovery site is being fitted with state of the art technology to minimize the risk of down time and increased fault tolerance.
Research and Development

To enable Information Technology to add value to the business and be a true strategic partner to the end user departments within the organisation, Commercial Credit follows a practice of regular introduction of new concepts and technologies. Ongoing projects include revamping of the entire ERP system utilizing new technology standards and incorporating business intelligence tools which would result in the provision of improved management information that lead to insights for improving processes and developing new products. We have also created test labs with latest technology to nurture creativity and encourage innovation. The implementation of mobile Point of Sales systems (POS) enabling mobile collections and receipting is a major initiative to take Commercial Credit services to the customers door step resulting in improved convenience. A unique and scalable IT system is also being implemented to support Commercial Credit and Finance PLCs proposed savings prodcut range.
Service Delivery
In an effort to increase the effectiveness and efficiency of IT as a service, globally accepted frameworks such as Information Technology Infrastructure Library (ITIL) are being implemented to ensure that a cohesive set of best practices are followed thereby creating value for the business. The introduction of an ITIL ready help desk system and ITIL trained support staff will be major components in this project.
Consolidation
In constructing an easy to manage, highly scalable, and an environmentally friendly IT service, Commercial Credit has fully embraced concepts such as virtualization and consolidation. Initiatives have been taken during the fiscal year 2011/2012 to consolidate its servers, storage and computers enabling higher data security, better utilization of resources and flexibility.
Connectivity and Collaboration

In order to ensure availability of uninterrupted ICT services, Commercial Credit has obtained services from leading telecommunication service
Information Technology Road Map
2014 2013 2012 2011
ERP | PO S Coll obo Dev rat ice ion | Tes |I tL ab |C IT A ud Sto it ra
IT Au dits
ial Media | Soc em yst esk S gs eD vin rvic ideo Confere Sa Se L te | V nci bsi ng TI s We t r i V uali ation K r e L rv C o i t n a d e i l S so s | Con ge
2014 2013 2012 2011
nt y n da vit tio un ecti ica d rtif e Re onn dC C an dit ions ing n t i IT Au ra enda LT mm o c e ITI R Security and Policy Disaster Recovery
Di sa Sit ster e U Re pg cov rad er e y
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Strategic Marketing
At Commercial Credit, an organization wide commitment towards market orientation is encouraged. The essence of this approach is built into the overall business strategy, making marketing an integral part of the day to day business operations at all levels across the Company. For Commercial Credit marketing means much more than generating commercial benefits for the Company.The many marketing initiatives focusing on educating society in general based on the Companys shared values make Commercial Credit differentiated in the highly competitive market place. Strategic Marketing of Commercial Credit and Finance PLC is expected to play a pivotal role in the attainment of its long term goals and is thus well aligned with the Strategic Plan of the Company. The marketing efforts of the Company are mainly centred on brand and product development with the objective of establishing long term relationships with its valued customers and other stakeholders. modificationsand re-launching of such financial products in order to better cater to its valued customers. As per the Strategic Plan, Commercial Credit is intensively working on new product development particularly for fixed deposits, hire-purchase, pawning and micorfinance with improved features for customer convenience.
Brand Development
Enhancing brand awareness was the prime objective of the marketing strategy for the fiscal year under review and significant results were achieved in this regard. Commercial Credit employs both in-house and independent research units in evaluating advertising and promotions, the outcome of which is then used to track the progress of such marketing related activities. The substantial improvement in Top-of-theMind brand recall of Commercial Credit, according to a survey carried out by one of the leading independent market research institutions in Sri Lanka, is evidence of the effectiveness of strategies employed. The concentration in marketing campaigns both ATL (Above the Line) and BTL (Below the Line) was intensified.There was much focus on sponsoring major events. The Sirasa Cricket Carnival was a series of such events. Through this sponsorship, while the brand was widely exposed throughout the country, Commercial Credit was able to assist in the process of bringing into light the talents of a large number of youth. Commercial Credit was the Main Financial Partner for the widely popular educational exhibition, Future Minds. Here too, in addition to enhancing brand awareness, the Company was able to contribute in nurturing future leaders for Sri Lanka. Further, comprehensive brand awareness campaigns were undertaken in association with network expansion. In addition, increased attention was given during the fiscal year under consideration in improving customer loyalty and retention.
Product Development
Commercial Credit strongly believes in the need for continuous product development in respect of which much effort is being utilized in nurturing innovation within the organization. The Company employs independent evaluation techniques on a continuous basis in assessing the functionality of financial products and then carries out necessary
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Human Resources
We believe that the role of the Human Resources function is to enable people to perform at their best, in the short, medium and the longer term; continuously improving in their effectiveness while steadily moving themselves and their organization towards a set of agreed goals and objectives. At Commercial Credit, we have based our approach in fulfilling this role by empowering our people, guided by a set of strong shared values and inculcating in them a sense of purpose and a drive for excellence. While the very purpose of the existence of our Company relates to the uplifting of lives of people - people in and outside the organization, we pay close attention to employee wellbeing, training and development both professional and personal, employee performance and rewarding, and planning for the future.
Employee Wellbeing
Commercial Credit readily acknowledges the outstanding commitment and contribution of its staff which has enabled the Company to reach the lofty heights it has risen to thus far. Therefore it is fitting that we take the professional and personal concerns of our employees seriously, and willingly travel the extra mile to ensure that a good balance is maintained between office and home. We are fully committed to their personal and professional wellbeing. Through our shared values, we facilitate the leading of a balanced life and sincere guidance and counseling are continuously offered on the four Human Hungers namely: Live, Love, Learn and Leave a Legacy. Opportunities are provided for the staff to take part in sports and recreational activities for their entertainment and personnel wellbeing. Further, a pension scheme is being constructed and will be implemented subject to the necessary approvals from the concerned authorities. Employee health is also our concern. With this aspect in mind the Body Mass Index (BMI) computation for each employee which could be done automatically using the IT System each morning when he /she logs on was implemented. It is evident that this small initiative is already bearing results! Nine regional Family Days were held during the year through which the culture and Shared Values of Commercial Credit were introduced to the families of employees and they were provided with a platform to display their talents and at the same time have an enjoyable experience. The results of the employee satisfaction survey introduced as an annual exercise and carried out for the first time recently speak eloquently of the high level of appreciation of the staff for the commitment of Commercial Credit in uplifting their professional and personal lives.
Our Shared Values

Unrelenting commitment towards the implementation of our shared values and thereby empowering and uplifting the lives of every person engaged with Commercial Credit naturally stands as a prime objective of the Human Resources division. The specific values we subscribe to are listed at the very beginning of this report. Much effort is expended in bringing our staff to a high level of appreciation of these values and in soliciting from them a strong commitment in the practice of these values not only in official dealings but also in their personal lives. Commercial Credit held its Value Day on 4th March, 2012 when we formally set-off on the long journey towards deeply establishing a value centered culture within the Company with the participation of 800 employees representing all branches and service centres, led by the Board of Directors. Detailed presentations and explanations were given to elaborate on the meaning of each value. Further, the concepts behind these values were brought to life through mini-dramas written and directed by popular tele-drama personalities which were enacted by the employees of Commercial Credit. Eminent guest speakers helped in educating employees on the importance of the Companys shared values. The Company theme song, Hirugen Bihiwee was released and each employee was presented with the Value Badge for the first time. The entire Commercial Credit Team took the Value Oath and pledged to practice the shared values in all their actions. Following the value day, in taking forward the implementation of these values, 73 Value Mentors were appointed and provided with training on the five shared values and 7 habits (refer below). Further, Regional and Corporate Value Committees were formed while a Value Register is being developed to enable staff to commend and appreciate practices of fellow staff members who are truly living the shared values of Commercial Credit. With a view to further educating the employees on the values and thereby emphasizing on the need for their implementation, poem and poster competitions were organized while all branches and centres prominently displayed slogans related to values. Guest speakers were also invited to deliver special lecturers to staff on the significance of practicing the values.
[Employee Satisfaction Survey]

400 300 200 100 0
My Career
Strongly Agree
My Role
Agree
My Work Environment
Disagree
My Life
Overall
Strongly Disagree
Training and Development

Training staff to be efficient and effective in core business activities is of fundamental importance when following a policy of employee empowerment. With this aspect in mind and the intension of the improvement of the professional life of staff, Commercial Credit has identified the skill and knowledge gaps of its employees and is fully committed to bridging these gaps through the execution of training sessions. These
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sessions are aimed at the development of specific functional and technical skills, general IT and similar skills and soft skills. These programs are designed not only for the benefit of the Company but also for the benefit of the individuals concerned. Most of these modules have been designed and conducted by internal resource persons. With the view of nurturing future leaders and for the development of their careers, Commercial Credit conducted English language improvement programs, advanced MS Excel instruction classes at branch level, while offering sponsorships enabling staff to take part in training sessions conducted by national and international training institutions. Further, out-bound training programs were conducted and professional trainers were invited to conduct a series of lectures to the staff on a wide range of subjects.
and practical experience, and the wisdom and compassion, contained in the 7 Habits teachings a powerful force enabling personal change. Thus with the notion of uplifting the lives of people, much focus was placed on instilling the 7 Habits firmly among the employees. This would undoubtedly enable them to have a holistic and integrated approach to achieve effectiveness in each role they play in their professional and personal lives. With a view to enhancing the understanding on 7 Habits, trainers were appointed and trained together with selected staff by FranklinCovey South Asia. Further, comprehensive work shops were organized for staff, carrying presentations and discussion forums. Following this, trainers play a significant role in educating staff on 7 Habits thereby facilitating the inculcation of these habits for effectiveness in their personal as well as professional lives.
Performance and Rewarding

During the fiscal year under consideration 360 degree value evaluation system was designed and subsequently made operational for the first time at Commercial Credit. This enables staff to evaluate their subordinates, peers and superiors. Employees will be rewarded based on the results of these evaluations together with other subjective and objective criteria focusing on soft skills and operational results, where individuals monthly profit sharing, annual increments and annual bonuses are decided upon. We believe this will prepare a well fertilized ground in nurturing individuals who live by a set of strong principles and would achieve the goals for themselves personally and for the Company.
Workforce Planning
Commercial Credit forecasts the need for human resources on a timely basis and adopts a well defined strategy of staff recruitment by attracting qualified and experienced personnel. This is confirmed by continued success the workforce has delivered for the Company. Further, the Company also practices recruitment of youth with leadership traits with a view to developing personnel for leadership and operational roles in the future. In the current carder 84% of staff is in the age group of 25 -30 years.
Out bound Training - Thoutupola
Diversity and Inclusivity

Our Company stands strongly against all forms of discrimination in the workplace which could be based on age, gender, nationality, religion, race, color, and disability, and is committed towards the provision of equal employment opportunity. Commercial Credit is also focused on recruitment of staff so that the proper gender and ethnic balances could be maintained. During the year under review significant progress has been achieved towards this goal.
Focus on The 7 Habits

The Seven Habits of Highly Effective People authored by Dr. Stephan Covey, the live wire behind the world renowned personal development organization FraklynCovey is a major source of inspiration for us at Commercial Credit. It is opportune to mention here that we are deeply saddened by his recent passing and are determined to join the millions of people round the globe who are effectively using the principles underscored by him. We consider the blend of fundamental principles
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UDC Business Awards

Cementing its reputation as a premier financial institution benchmarking the highest international standards of service and operation, Commercial Credit and Finance PLC was adjudged Best Finance Company in Asia at the international UDC Business Awards 2011, Malaysia. This recognition positions Commercial Credit and Finance PLC on a global platform of award winning financial institutions. Presented for the first time by the Universo De Comercio (UDC) UK in collaboration with El Universo De Comercio Sdn Bhd, Malaysia, the UDC Business Awards attracted much attention from the private and government sectors of several countries, as well as leading business personalities and entrepreneurs. The UDC has cited outstanding accomplishments in business development as the defining factor in crowning Commercial Credit with this award.
Award presented by Former Prime Minister of Malaysia Dr. Mahathir Mohamed. Award received by Mr Andrew Samuel DGM - Corporate Planning in the presence of the DGMs - Operations Mr K L A Senevirathna and Mr Sudath Jayasekara.
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Product Portfolio
Leases
Lease products of Commercial Credit offer a wide spectrum of financing options that endeavour to meet diverse needs of different types of customers seeking to drive away in their dream vehicle. The product range has served many segments of the market via the Companys wide reach and strategic allocation of resources to areas with higher potential. Plans are afoot to introduce innovative offerings through synergistic alliances with automotive dealers and insurance companies in the coming year which will bring value addition to our customers. As one of the main products offered by Commercial Credit, during the fiscal year under review leases were heavily focused on, given the increased demand for unregistered vehicles. Lease facilities were offered within the shortest possible time resulting in quick service delivery for our customers which was one of the prime differentiating factors. This was achieved by delegating decision making authority to a team of highly trained managers at different levels of the organization and a set of well thought out processes while the efficiencies in the IT systems significantly contributed to reducing paper work. The number of customers serviced as at end of the year was 9,456 compared to 6,713 at the commencement of the period. Commercial Credit foresees the challenges that the leasing industry will be confronted with during the next financial year in the changed macro-economic environment and is focused on minimising the resulting adverse effects on our business. Further, there will be greater focus on the different customer segments making sure that funds are optimally utilised for better yields. Commercial Credit will further develop affiliations with vehicle importers with a view to neutralising the possible increased competition and adverse effects resulting from the changes in the macro-economic environment.
Microfinance
The Microfinance product caters specifically to women entrepreneurs who have little or no access to normal channels of banking, with the objective of uplifting their lives which is directly aligned to the organisational purpose of Commercial Credit. It is evident that in many ways the product has contributed towards the uplifting of the lives of disadvantaged groups of society going beyond simply meeting a single need of a financial arrangement, thereby creating a win-win situation for both customers and the Company. Microfinance customer base of the Company stood at 105,153. In order to instill the savings habit among the Microfinance segment, Commercial Credit and Finance PLC introduced a Fixed Savers Deposit scheme and is will be unveiling a housing loan scheme for customers, which would assist towards realizing their dreams of a house of their own. Commercial Credit and Finance PLC is determined to substantially increase the Microfinance customer base and loan portfolio during the next financial year, which would be facilitated with the introduction of new financial products. The Company is considering opportunities available in Microfinance outside Sri Lanka in the Asian region, in which our expertise can be employed and we believe this will bring immense benefits to these communities as well as to the Company. With the aim of improving the effectiveness of our Microfinance operations Commercial Credit is planning to obtain a rating from M-CRIL (Micro-Credit Ratings International Limited) who are the pioneers in Social Rating for Microfinance Institutions.
Pawning
Being one of the newest products introduced to the portfolio of Commercial Credit, pawning recorded a satisfactory growth in its portfolio and related income during the year. The Companys product and service proposition was able to cater to an increasing demand despite an upward revision in market interest rates. Having commenced in September 2011 with 11 locations, the Company has made pawning advances amounting to Rs. 295 million and had a pawning portfolio of Rs. 143 million as at the end of the fiscal year under review. The prime factor that differentiates Commercial Credit in the discipline of pawning is indisputably the customer friendly service delivery and the provision of the highest advances. Commercial Credit plans to extend its pawning centers up to 50 locations during the next financial year and is aiming to convert the product to one of our important business lines. Novel pawning products to be introduced will carry attractive features while offering high advances. An easy payment scheme in particular will be unveiled to the market
Hire Purchase
The Company has several pioneering products in the hire purchase market which have enjoyed continued success. The market opportunities for these products have vastly improved with the increase in demand for registered vehicles. The Quick Cash product in particular was further refined in terms of administration and documentation where customers are served with the appropriate financial solutions in the shortest possible time with a benchmark standard of one hour. The total number of hire purchase customers as at year end was 4,592. Commercial Credit will increase its focus on the hire purchase segment in order to capitalise on the enhanced potential in this category of product given the changes in the macro environment.
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enabling customers to purchase jewelry. Further, Commercial Credit will establish dedicated pawning centres in selected areas that hold the potential in assisting customers to resolve their unexpected cash requirements.
Loans
Cash loans are specifically designed to meet urgent cash needs with features such as speedy processing and flexible repayment terms. A substantial growth in cash loans was witnessed during the year with a growth in the customer base of 76%. Education loans are granted for both local and international educational purposes, where the borrower may be either the student or the parent. The product has been well received and undoubtedly addresses a need in the market which is demonstrated by the considerable growth achieved in this portfolio and it is evident that it possesses much potential. Financing Small and Medium Enterprises (SMEs) gathered further momentum during the fiscal year under review with the launch of Revolving Business Loans. The product has attained considerable success during the fiscal year 2011/2012 thus encouraging grass level enterprises which are unable to obtain facilities from traditional banking institutions. Special attention was paid to customer service levels related to these products offering increased convenience where the processing time were greatly reduced with the employment of well thought out processes and the delegation of authority among well trained officers which was further supported by the advanced Management Information System (MIS).
providing sound investment advice. During the fiscal year under evaluation, the number of investment officers was considerably increased to cater to the growing demand for their services and to ensure increased depositor convenience. Further, Commercial Credit remained extremely flexible in the provision of customized value added services thereby catering to different requirements of its valued depositors.
Fixed Deposits
Commercial Credit and Finance PLC accepts fixed deposits from the public which is its major source of funding, for which interest is paid on a monthly basis or at maturity at the depositors discretion. Fixed deposits are accepted for periods ranging from one month to five years. The fixed deposits base has increased to 11,180 depositors from 7,731 recorded as at the end of the prior fiscal year. Further, the fixed deposits retention ratio for the year under evaluation was significantly increased compared to the previous years retention ratio. With the objective of passing the maximum benefit to its loyal depositors, Commercial Credit offers the highest interest rates permitted by the periodic directives of the Central Bank of Sri Lanka. Much of the success of the growth in fixed deposits is owed to the well trained and motivated staff responsible for serving the depositors who cater to the investment needs of individuals and institutions by
49
Service Network
The Company accelerated the development of its network reach during the year, in order to provide convenient access to customers across the island. Currently, the Company operates offices at 26 locations and plans are in place to introduce 22 more during the next financial year, with greater focus on areas of lower penetration such as the North and the East. The necessary approvals have been obtained from the Central Bank of Sri Lanka for this expansion. New locations will be equipped with the latest infrastructure to ensure a conducive working environment for employees and better customer service delivery.
Service Centre Opening - Dambulla
Service Centre Opening - Matara
Service Centre Opening - Maharagama
Service Centre Opening - Ampara
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Service Network
Head Office No. 106, Yatinuwara Veediya, Kandy. Tel: 081 2234976 Ampara No. 40, A, Regal Junction, Ampara. Tel: 063 2224232 Anuradhapura No. 272, Maithripala Senanayake Mawatha, Anuradhapura. Tel: 025 2225743 Avissawella No. 72, Yatiyanthota Road, Avissawella. Tel: 036 4926366 Badulla No. 262, Lower Street, Badulla. Tel: 055 2224803 City Office No. 45, Dharmapala Mawatha, Colombo 07. Tel: 011 4655655 Dambulla No. 360, E, Matale Road, Dambulla. Tel: 066 228350 Dehiattakandiya No. 10, Opposite Bank of Ceylon, Dehiyattakandiya. Tel: 027 2250241 Embilipitiya No. 53, Hayesha Building, Main Street, Embilipitiya. Tel: 047 2261831 Galenbindunuwewa No. 131, Sippikulama Road, Galenbindunuwewa. Tel: 025 2258530 Galle No. 14, Dickson Road, Galle. Tel: 091 2233134 Galnewa No. 13, Jaya Mawatha, Galnewa. Tel: 025 2269070 Gampaha No. 06, Mangala Road, Gampaha. Tel: 033 2232233 Hingurakgoda No. 01, Medirigiriya Road, Hingurakgoda. Tel: 027 2245506 Kuliyapitiya No. 82, Kurunegala Road, Kuliyapitiya. Tel: 037 2282233 Kurunegala No. 53, Ground Floor, Rajapihilla Road, Kurunegala. Tel: 037 2231312 Maharagama No. 189, Old Road, Maharagama. Tel: 011 2848021 Mahiyanganaya No. 24, New Town, Mahiyanganaya. Tel: 055 2257461 Matara No. 12 B, Nisali Mandiraya Akuressa Road, Nupe, Matara. Tel: 041 2232615 Moratuwa No. 115, New Galle Road, Moratuwa. Tel: 011 2642508 Negombo Greens Road, Negombo. Tel: 031 2222325 Nugegoda No. 231, High Level Road, Nugegoda. Tel: 011 2815830 Nuwara Eliya No. 50, Kandy Road, Nuwara Eliya. Tel: 052 2234841 Ratnapura No. 126 B, Bandaranayaka Mawatha, Ratnapura. Tel: 045 2232820 Thambuththegama No. 150, Opposite Public Fair, Thambuththegama. Tel: 025 2275558 Wennappuwa NPS Building, Chilaw Road, Wennappuwa. Tel: 031 2252407
Proposed Locations
Ambalangoda No. 57, Galle Road, Ambalangoda. Bandarawela No. 258, 2nd Floor, Badulla Road, Bandarawela. Jaffna No. 62/20, Stanly Road, Jaffna. Ambalanthota No. 110, Main Street, Ambalanthota. Polonnaruwa No. 15, Batticaloa Road, Kaduruwela. Puttlam No. 136 B, Kurunegala Road, Puttlam. Monaragala No. 5, 2nd Floor, Wellawaya Road, Monaragala. Nawalapitiya No. 31, Dolosbage Road, Nawalapitiya. Kilinochchi No. 247 A, A-9 Road, Kilinochchi. Wattala No. 175/B, Negombo Road, Wattala. Kurunegala No. 24, Negombo Road, Kurunegala Kegalle No. 498, Kandy Road, Kegalle. Nelliady No. 146/2, Moanhans, Jaffna Road, Nelliady. Kantale No. 72, Mahaweediya, Kantale. Trincomalee No. 152, Central Road, Trincomalee. Vavuniya No. 149/2, Goodshed Road, Vavuniya. Mannar No. 13, Hospital Road, Mannar. Padaviya No. 386/A, Padavi Parakramapura. Kalutara No. 429, Galle Road, Kalutara North. Bandaragama No. 51/1/2, Horana Road, Bandaragama. Matale No. 11, Vihara Road, Matale. Batticaloa No. 428/1, Trincomalee Road, Batticaloa.
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Financial Performance Review

Lease, Hire Purchase, Loans and Advances
The total lending portfolio of Commercial Credit increased from Rs. 4,435 million to Rs. 8,648 million during the year, thus recording a growth of 95%. Lease related assets reached a level of Rs. 1,969 million at year end compared to Rs. 871 million at the commencement of the year displaying a growth of 126% while hire purchase assets grew by 33%. Total loans and advances stood at Rs. 4,532 million at year end showing an increase of 133% over the figure of Rs. 1,944 million at the end of the previous year. The main contributor to the growth of the loans portfolio was Microfinance with an increase of 158% over the prior year reaching a level of Rs. 2,768 million. Cash loans also grew by 76% to reach Rs. 1,020 million at year end. The Company has disbursed gold loans amounting to Rs. 295 million and had a related portfolio of Rs. 143 million as at the end of the fiscal year under review. The overall gross Non Performing Accommodations (NPA) ratio as at the year end was 3.34% compared to 4.92% for previous financial year while Microfinance in particular recorded a NPA ratio of 0.18%.
Interest Income
During the financial year 2011/2012 Commercial Credit experienced a year on year growth in interest income amounting to 122%, from Rs. 1,113 million to Rs. 2,470 million. The key contributor to the interest income was interest on loans which grew by 214% from Rs. 451 million to Rs. 1,415 million while accounting for 57% of total interest income. Interest on lease and hire purchase grew by 46% and 63% respectively and interest income from other sources increased from Rs. 35 million to Rs. 80 million. The contribution to total interest income of interest on leases and hire purchase dropped from 24% and 32% in 2010/2011 to 16% and 23% in 2011/2012 respectively.
[Interest Income]
Millions (Rs.) 1500 1200
2010/2011
900
2011/2012
Total Assets
Commercial Credit experienced a growth in total assets amounting to 96% reaching a level of Rs. 10.5 billion as at the end of the fiscal year under review compared to Rs. 5.4 billion in the preceding fiscal year. Out of the total asset base 87% accounted for interest earning assets as at year end compared to 86% at the commencement of the period. From the year-end total assets of the Company, lease assets accounted for 19% compared to 16% at the end of the prior fiscal period. Microfinance accounted for 26% of the total assets of Commercial Credit as at the end of the financial year under review compared to 20% as at prior year end. . Hire purchase contributed 20% of the total assets of the fiscal year end 2011/2012 compared to 30% of the previous year.
600 300 0
Leases
Loans
Hire Purchase
Land Finance
Treasury Bills
Bank Deposits
Customer Deposits and Borrowings

Total interest bearing liabilities of Commercial Credit grew from Rs. 595 million to Rs. 1,518 million during the year 2011/2012, a growth of 155%. Fixed deposits increased to a level of Rs. 6,240 million from Rs. 3,662 million recording an increase of 70%. Fixed Savers Deposits which stood at Rs. 178 million at the end of the last fiscal period increased to Rs. 515 million by year end, resulting in a remarkable growth of 189%. Borrowings from the banking sector was Rs. 582 million at the commencement of the year which increased to Rs. 1,511 million by the fiscal year end 2011/2012. As such Fixed Deposits as a percentage of total liabilities reduced to 67% at year-end from 74% at the end of the year 2010/2011 while the contribution of bank borrowings to total liabilities increased from 12% as at 31st March 2011 to 16% as at 31st March 2012. Fixed Savers Deposits which were 4% of total liabilities in the previous fiscal year increased to 6% as at the end of fiscal year under review.
[Total Assets]
2011/2012 2010/2011
Loans and Advances Real Estate and Vehicle Stock Investment Property
Lease
Hire Purchase
Property, Plant and Equipment Other Assets
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[Deposits from Customers]

2011/2012 2010/2011
Net Interest Margin

The Net Interest Margin (NIM) of the Company for the financial year under review was 22% which compares favourably with that of the NBFIs sector which was 5% for the year.
[Net Interest Margin]

(%) Fixed Deposits-Monthly Fixed Deposits-Maturity Savers Deposits 25 20 15 10 5 0
2007/2008
2008/2009
2009/2010
2010/2011
2011/2012
Interest Expenses
The financial year under review marked a year on year growth of 70% in interest expenses compared to the growth of 98% in the fiscal year 2010/2011. Interest expenses on deposits obtained from the public grew from Rs. 384 million to Rs. 599 million during the year, marking an increase of 56% while interest on borrowings from financial institutions grew from Rs. 26 million to Rs. 100 million, which is an increase of 284%. The increase in the market interest rates over the year and the increase in customer deposits and bank borrowings obtained to finance the growth in lending activities contributed to this increase.
Profitability
Resulting from the growth of the asset base and the NIM, the Company recorded an exceptional year of profitability in 2011/2012.
[Profitability]
Millions (Rs.) 1800 1440 1080 720
[Interest Expenses]
Millions (Rs.) 400 320
360 240
2010/2011 2011/2012
0 2007/2008 2008/2009 2009/2010 2010/2011 Net Interest Income Profit/ (Loss) Before Taxation 2011/2012
160 80 0
Fixed Deposits - Maturity
Fixed Deposits - Term
Savers Deposits
Loans
Bank Overdrafts
Finance Leases
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The Return on Assets (ROA) achieved by Commercial Credit for the fiscal year 2011/2012 was 13.7% which is well above the industry average which stood at 3.3%. The substantial growth in ROA was chiefly brought about by the higher Profit Before Tax (PBT) amounting to 345%, from Rs. 244 million to Rs. 1,085 million, compared to the increase in total average assets which was 108%. This amply reflects the effective utilization of resources in generating income well above the industry average. The Profit After Tax increased from Rs. 60 million in the year 2010/2011 to Rs. 758 million in the fiscal year 2011/2012.
[Shareholders Funds]
Millions (Rs.) 1200 960 720 480 240 0 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012
[Return on Assets]
(%) 14.0 11.2 8.4 5.6 2.8 0.0 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012
Shareholders Funds and Return on Equity

With the increased Profit After Tax for the fiscal year 2011/2012 shareholders funds stood at Rs. 1,190 million moving from Rs. 432 million as at the end of last year. The stated capital remained constant at Rs. 171 million. Return on Equity amounting to 93.5%, is substantially higher than the Industry average of 24.7% reported for the year 2011.
[Return on Equity]
(%) 100 80 60 40 20 0 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012
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Corporate Social Responsibility

Commercial Credit and Finance PLC, a responsible corporate citizen, remains firmly committed to contributing positively towards the greater good of society while being commercially focused and sustainable. Wherever possible we extend our hand to uplift the lives of people though simple acts of love. As a company that has a deep involvement in Microfinance, the very nature of our business the provision of financial services to a marginalized group of people who have no access to traditional sources of finance - takes on a social responsibility dimension. During the year, we undertook several initiatives as part of our social responsibility activities.
Trip to India for Microfinance Customers

189 of our loyal Microfinance customers were felicitated with fully sponsored pilgrimages to India, a once-in-a-lifetime opportunity for this segment of customer. Customers of each religious denominations were sponsored on pilgrimages pertaining to their beliefs. Hindu customers were sent to Thirupathy Kovil, Christians to Velankanni Church while Buddhists visited Buddhagaya and Benares. For Muslim customers a trip was arranged to the Taj Mahal.
A Day Out for Microfinance Customers and their Families

An exciting event was organized at a theme park - Leisure World - bringing together Microfinance customers and their families representing 34 Customer Servicing Units. For majority of the 4,298 people who participated, it was the first time they had visited such a place and thus was a novel and exhilarating experience. The events provided an opportunity for customers from various districts and backgrounds to network and interact with their peers.
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Improving Quality of Life 0f Microfinance Customers

The Company engages with the key customer groups in ways that go well beyond a commercial purpose. Over and above the provision of financial services to this marginalize group, we also provide them training on self-development, healthcare and wellbeing, and child education free of charge. The training programmes are aimed at sharpening their entrepreneurial skills and expanding their awareness of a better lifestyle in order to assist Microfinance customers to make meaningful changes to their lives and those of their families. We believe this will lead to better employment opportunities and a greater contribution to the countrys GDP from this segment in the long term. 13 such training programmes were held during the year, targeting 11,750 participants.
Blood Donation Campaigns

As a Company that espouses the value of uplifting peoples lives through simple acts of love, we believe that donating blood is akin to giving the gift of life to those in need. As such, facilitating blood donation is one of the focus areas of our corporate social responsibility. This year too, several blood donation programmes were organized at several of our locations. Many of our employees as well as customers and the general public participated with much enthusiasm at these programmes which were organized in collaboration with the National Blood Transfusion Service.
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57
Corporate Governance defines the decision-making systems and structure through which a company is managed in the best interest of its stakeholders. It is a powerful tool for influencing the behavior of companies and for protecting investors, while good Corporate Governance helps improve public understanding of the structure and activities of the company. We recognise that controls and procedures play an integral part in maintaining high standards, and that transparency, disclosure, financial controls and accountability are the pillars of any good system of Corporate Governance. Commercial Credit and Finance PLC, is committed to high standards of Corporate Governance and we are constantly seeking ways to making our Corporate Governance even more effective and reliable.
Board Sub Committees

The Board Sub Committees scrutinize and analyze the areas under their purview and make recommendations to the Board on necessary improvements and modifications to the systems and processes of the Company. The Composition of the Board as at the end of the period under review is set out in the following table, together with a record of the attendance of every Director at Board and Sub Committee Meetings during the period under review.
Compliance with the Code of Best Practice

The Company currently complies with the requirements set out in the Code of Best Practice for Corporate Governance issued by the Institute of Chartered Accountants of Sri Lanka, Rules on Corporate Governance contained in the Listing Rules of the Colombo Stock Exchange and the related regulations of the Central Bank of Sri Lanka.
Board of Directors
The Board of Directors of the Company comprises of eight members who jointly provide strategic leadership and direction to the Company. The Companys Board of Directors consists of professionals in varied fields who collectively possess a vast wealth of knowledge and experience, and are thus eminently suitable to provide the leadership and direction required. One Third of the Directors retire by rotation at each Annual General Meeting and those eligible are recommended for re-election. The Board meets approximately once a month, and as and when the need arises to discuss any prevailing issues, to take appropriate action in achieving the results and to review the financial performance of the Company. In accordance with the Listing Rules of the Colombo Stock Exchange, the Board has constituted two Sub Committees, namely, the Audit and the Remuneration Committees, in addition to which an Integrated Risk Management Committee has been formed in accordance with the requirement of the Directives of the Central Bank of Sri Lanka constituting of members of the Board and Senior Management. A Statement of Directors Responsibility for the preparation of Financial Statements is set out on page 79 of this Report.
58
Board Eligible to attend Attended Name of the Director Category
Audit Eligible to attend Attended
Remuneration Eligible to attend Attended
Risk Eligible to attend 5 5 N/A 5 N/A 5 N/A N/A N/A Attended 5 4 5 5 -
Mr C Perera Chairman Mr R S Egodage Mr G G Hemachandra Mr H S K Gunaratne Mrs G R Egodage Mr T Someswaran Mr M S D Pinto Dr. (Mrs) E Fernando (Appointed w.e.f 11.01.2012) Mrs V W Fernando Resigned w.e.f 31.12.2011
Non-Executive Independent Executive Executive Non-Executive Independent Executive Non-Executive Independent Non-Executive Independent Non-Executive Independent Executive
12 12 12 12 12 12 10 4 8
12 12 8 11 12 9 10 4 8
10 N/A N/A 10 N/A 10 N/A N/A N/A
8 9 10 -
2 N/A 2 2 N/A N/A N/A N/A N/A
2 2 2 -
Company Secretaries
Jacey & Company provides corporate secretarial services to the Company. The Company Secretaries play a key role in compliance matters by ensuring that the Company complies with the requirements of the Companies Act No. 7 of 2007, the Rules of the Colombo Stock Exchange and other regulatory bodies. The Secretaries also ensure that Board procedures are followed and information is provided to shareholders on a timely basis.
Compliance with Legal Requirements

All Directors have access to the advice and services of the Company Secretaries as well as to the financial information of the Company. The Directors make every endeavour to ensure that the Company complies with applicable laws and regulations.
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The following table indicates the status of compliance as per section 07 of the Listing Rules of the Colombo Stock Exchange.
Rule No. 7.10.1 7.10.2 Subject Non-Executive Directors Independent Directors Applicable requirement At least 1/3 of the total number of Directors should be Non-Executive Directors at the immediately preceding Annual General Meeting At least 1/3 of Non - Executive Directors should be independent Of the eight Directors Mr C Perera, Mr H S K Gunaratne, Mr T Someswaran, Mr M S D Pinto and Dr. (Mrs) E Fernando are Independent Directors Each Non-Executive Director should submit a declaration of independence/non independence in the prescribed format 7.10.3 Disclosure relating to Directors Names of Independent Directors should be disclosed in the Annual Report The Board shall make a determination annually as to the independence or non independence of each Non-Executive Director based on the Declaration A brief resume of each Director should be included in the Annual Report and should include the Directors areas of expertise 7.10.5 Remuneration Committee A listed company shall have a Remuneration Committee and shall comprise of NonExecutive Directors a majority of whom will be independent Complied Please refer page no. 77 in this Annual Report Complied Complied Compliance Status Complied
7.10.6
Audit Committee
A Listed entity shall have an Audit Committee comprising of Non-Executive Directors a majority of whom shall be independent A Non-Executive Director shall be appointed as the Chairman of the Audit Committee Unless otherwise determined by the Committee the Chief Executive Officer and the Chief Financial Officer shall attend Audit Committee Meetings The Chairman or one member of the Committee should be a member of a recognized professional accounting body Complied Please refer page no. 76 in this Annual Report
60
The Companys compliance with the Code of Best Practice on Corporate Governance issued jointly by the Institute of Chartered Accountants of Sri Lanka (ICASL) and the Securities and Exchange Commission (SEC) and the Listing Rules of Colombo Stock Exchange (CSE).
Corporate Governance Principle Directors
SEC & ICASL Code Reference
Compliance Status
Extent of Adoption
A.1 The Board The Company should be headed by a Board, which should direct, lead and control the Company. The Board consists of professionals in Finance, Accounting, Management, Information Technology, Marketing, Human Resources and Business Leadership. All Directors possess the skills, experience and knowledge complemented with a high sense of integrity and independent judgment. Their leadership skills, direction provided and controls put in place ensure the achievement of the objectives of the Company set out in the corporate plan and the budget which aim to satisfy the expectations of all stakeholders. Board Meetings A 1.1 Compliant 12 Board Meetings were held during the year at approximately monthly intervals and details of meetings and individual attendance are provided on page no. 59 in this Annual Report The Board of Directors is responsible for strengthening the safety and soundness of Commercial Credit and Finance PLC by ensuring good governance and compliance with rules and regulations. Further the Board of Directors ensures the formulation and the implementation of a sound business strategy execution of which is facilitated by the skills and experience of the Chief Executive Officer and the management team, prudent management of risks by the employment of appropriate risk management systems while ensuring integrity of information, existence of effective internal controls and effective management of stakeholder interests.
Responsibilities of the Board
A 1.2
Compliant
Compliance with laws and access to Independent professional advice Advice and Services of the Company Secretary Independent judgment of Directors Dedication of adequate time and effort for matters of the Board Training for new and existing Directors
A 1.3
Compliant
There is a procedure agreed to by the Board of Directors to obtain Independent Professional Advice where necessary at the Companys expense.
A 1.4
Compliant
All Directors have access to the advice and services of the Company Secretary, who is responsible to the Board in ensuring that Board procedures are followed and that applicable rules and regulations are complied with. Members of the Board bring Independent Judgement with regard to issues on performance, strategy, resources and standards of business conduct. Adequate time and effort are utilised by members of the Board in ensuring that the duties and responsibilities owed to the Company are satisfactorily discharged and Sub Committee meetings being Integrated Risk Management Committee, Audit Committee and Remuneration Committee are attended by members of the Board of Directors. Sufficient knowledge sharing opportunities are made available for both new and existing members of the Board of Directors on Company and Industry related matters on a timely basis and the Board is kept informed on a continuous basis with regard to Industry specific matters and regulatory updates.
A 1.5
Compliant
A 1.6
Compliant
A 1.7
Compliant
A.2 Chairman and Chief Executive Officer (CEO) There is a clear separation in the duties of the Chairman and Chief Executive Officer to ensure a balance of power and authority, in such a way that any individual has no unfettered power in decision making. The role of the Chairman and Chief Executive Officer is functioning separately at Commercial Credit and Finance PLC. The provision of direction, leadership and managing the work of the Board are regarded as the responsibilities of the Chairman in ensuring that the Board functions effectively and performs both the intended regulatory and legal responsibilities. Execution of the business operations of the Company with the assistance of the Corporate Management is regarded as the primary role of the Chief Executive Officer.
61
Corporate Governance Principle Division of responsibilities of the Chairman and Chief Executive Officer
Compliance Status
Extent of Adoption
A 2.1
Compliant
The role of the Chairman and the Chief Executive Officer is not combined. The Chairman functions as an Independent Non-Executive Director whereas the Chief Executive Officer serves as an Executive Director in ensuring balance of power and authority such that no one individual has unfettered power in decision making.
A.3 Chairmans Role The provision of leadership and managing the Board are prime elements of the role of the Chairman in ensuring that the Board does discharge both of its legal and regulatory responsibilities in full. He preserves order and facilitates the effective discharge of the functions of the Board. The Chairmans role includes the responsibilities of ensuring; - that members of the Board of Directors are sufficiently encouraged to make effective contribution with in their respective capabilities for the benefit of the Company - a balance of power between Executive and Non-Executive Directors is maintained - the views of Directors on issues under consideration are ascertained - the Board is in complete control of the Companys affairs and alert to its obligations to all shareholders and other stakeholders
Role of the Chairman
A 3.1
Compliant
A.4 Financial Acumen The Board should ensure the availability within it of those with sufficient financial acumen and knowledge to offer guidance on matters of finance. Availability of sufficient Financial Acumen and Knowledge A.4 Compliant Directors profiles are given on pages 26 to 28 in this Annual Report.
A.5 Balance of the Board It is recommended to have a balance of Executive and Non-Executive Directors such that no individual or small group of individuals can dominate the decision making of the Board. Presence of NonExecutive Directors Independent Directors Independence evaluation review Signed declaration of Independence Determination of independence of the Directors by the Board Senior Independent Director Confidential discussion with the Senior Independent Director Meeting of NonExecutive Directors Recording of concerns in Board Minutes A 5.1 A 5.2 A 5.3 Compliant Compliant Compliant 5 of the 8 Directors of Commercial Credit and Finance PLC are Non-Executive Directors which is above the standard defined by the Code. All 5 Non-Executive Directors are Independent. All 5 Independent Directors are independent of management and free of any business or other relationship that could materially interfere with the exercise of their unfettered and independent judgment. Non-Executive Directors have made written submission as to their independence. The Board has determined that the submission of declarations by the Non-Executive Directors as to their independence is a fair representation and will continue to evaluate annually. Not applicable as the role of the Chairman and the Chief Executive Officer is separated.
A 5.4
Compliant
A 5.5
Compliant
A 5.6
A 5.7
Not applicable as the role of the Chairman and the Chief Executive Officer is separated. Chairman meets with Non-Executive Directors without the presence of Executive Directors as and when it is necessary. There were no matters of special concern raised by the Directors during the year that need to be recorded in the Board Minutes.
A 5.8 A 5.9
Compliant Compliant
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Corporate Governance Principle
Compliance Status
Extent of Adoption
A.6 Supply of Information The Board should be provided with timely information in a form and of a quality appropriate to enable it to discharge its duties. Information to the Board by the Management Adequate time for effective Board Meetings A 6.1 Compliant Management provides the Board with appropriate and timely information and additional information as requested by the Board from the management where necessary and the Chairman ensures all Directors are briefed on the issues arising at Board Meetings. The minutes, agenda and papers required for Board Meetings are provided to Directors at least 7 days before the meeting.
A 6.2
Compliant
A.7 Appointments to the Board In terms of the Companys Articles of Association a Director may be appointed by ordinary resolution passed at a meeting called for the purpose. Nomination Committee A Nomination Committee is not appointed. The Board collectively finalises decisions with regard to selection of new Directors and such process is regarded to be much meaningful as Directors could collectively evaluate any need for a new Director appointments in better managing the new strategic challenges encountered that demand new expertise which is lacking at the Board level. The Board of Directors collectively assesses the Board composition in deciding the adequacy of the combined experience and knowledge in successfully addressing the strategic demands encountered by the Company where such findings are made use of in determining new Board appointments and re-appointments. A brief resume of each new Director appointed is forwarded to the Central Bank of Sri Lanka and Colombo Stock Exchange in addition such information is revealed in the Annual Report of the Company. Public announcements are made for the notice of interested parties and the Colombo Stock Exchange is informed duly with regard to any change of information provided by Directors.
A 7.1
Compliant
Assessment of Board
A 7.2
Compliant
Disclosure of details of new Directors to shareholders
A 7.3
Compliant
A.8 Re-election The Code requires all Directors to submit themselves for re-election at regular intervals and at least once in every three years. Appointment of NonExecutive Directors Re-election by the shareholders A 8.1 A 8.2 Compliant Compliant Requirement is specified in the Articles of the Company. Requirement is specified in the Articles of the Company.
A.9 Appraisal of Board Performance to ensure the Boards responsibilities are satisfactorily discharged Annual appraisal of Board performance and that of its Committees
A 9.1 & 9.2
Compliant
The Board evaluate performance on an annual basis.
A.10 Disclosure of Information in respect of Directors The Code requires that the details in respect of each Director to be disclosed in the Annual Report for the benefit of the shareholders. Details in respect of Directors A 10.1 Compliant Details of the members of the Board of Directors are provided in this Annual Report.
A.11 Appraisal of CEO The Code requires the Board to assess the performance of the Chief Executive Officer (CEO) at least annually to ascertain the degree to which the CEO met the pre-set financial and non-financial targets. Financial and nonfinancial targets for CEO A 11.1 Compliant At the beginning of every fiscal year performance targets for the Chief Executive Officer are set which are aligned with the short, medium and long term strategic objectives of the Company.
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Corporate Governance Principle Annual evaluation of the performance of CEO
Compliance Status
Extent of Adoption
A 11.2
Compliant
The performance of the Chief Executive Officer is evaluated by the Remuneration Committee at their meetings and the minutes of such meetings are made available to the Board. The Board decides on the remuneration of the Chief Executive Officer based on his performance as recommended by the Remuneration Committee.
Directors Remuneration B.1 Remuneration Procedures The Code requires companies to have a formal and transparent procedure for developing policy on executive remuneration and fixing the remuneration packages of individual Directors and also recommends that no Director should be involved in deciding his/her remuneration in order to avoid the self review threat. Remuneration Committee Composition of the Remuneration Committee Remuneration of Non-Executive Directors Consultation of the Chairman and access to Professional Advice B 1.1 B.1.2 & B. 1.3 Compliant The Remuneration Committee is responsible for making recommendations to the Board, with regard to the remuneration of the Executive Directors. Please refer the Remuneration Committee Report on page no. 77 in this Annual Report. The Board as a whole determines the remuneration of Non-Executive Directors and they are offered a fee for serving on the Board of the Company and an additional fee for either chairing or being a member of its Committees. A related Board approved procedure is in place.
Compliant
B.1.4
Compliant
B.1.5
Compliant
B.2 The Level and Make up of Remuneration Levels of remuneration of both Executive and Non-Executive Directors should be sufficient to attract and retain the Directors needed to run the Company successfully. The proportion of remuneration of Executive Directors is linked to corporate and individual performance. Level and make up of remuneration of Executive Directors Remuneration of the Non-Executive Directors B.2.1 to B.2.8 Compliant The Remuneration Committee takes in to consideration the salary and the benefits paid to similar positions in other organizations, when determining the level of remuneration to be paid to Executive Directors. The contribution made towards the success of the activities of the Board by the Non-Executive Directors is considered when recommending their fees.
B.2.9
Compliant
B.3 Disclosure of Remuneration The Code requires the company to disclose in its Annual Report the details of the remuneration paid and the remuneration policy. Disclosure of Directors remuneration in the Annual Report. B.3.1 Compliant The Remuneration Committee report setting out the policy of the Committee is given on page no. 77 in this Annual Report. The Remuneration paid to the Board of Directors is disclosed on page no. 72 in this Annual Report.
C. Relations With Shareholders C.1 Constructive use of the Annual General Meeting (AGM) and conducting of General Meetings The Code requires the Board to use the Annual General Meeting to communicate with shareholders and encourage their active participation. In this regard all shareholders of the company receive the Notice of Meeting within the statutory due dates. Use of proxy votes Separate resolution for all separate issues Availability of all Board Sub Committee Chairmen C.1.1 C.1.2 Compliant Compliant Proxy form will be circulated along with the Notice of Meeting. A separate resolution is proposed for each substantially separate issue The Chairmen of the Board, Audit Committee, Integrated Risk Management Committee and Remuneration Committee are present at the AGM to answer the questions raised by shareholders.
C.1.3
Compliant
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Corporate Governance Principle Adequate notice of the AGM to shareholders together with the summary of the voting procedure
Compliance Status
Extent of Adoption
C.1.4 & C.1.5
Compliant
The Notice of Meeting is sent along with the Proxy form to shareholders 15 working days prior to the date of the AGM as required by statute. The summary of the voting procedure is mentioned in these documents.
C.2 Major Transactions Directors are required to disclose to shareholders all proposed material transactions which would materially alter the net asset position of the company. Major transactions C.2.1 Compliant During the year there were no major transactions as defined by Section 185 of the Companies Act No. 7 of 2007.
D. Audit and Accountability D.1 Financial Reporting The Board is required to present a balanced and understandable assessment of the Companys financial position, performance and prospects. Reports to the public, and Regulatory & Statutory reporting Directors report in the Annual Report Statement of Directors and Auditors responsibility for the financial statements Management Discussion and Analysis Declaration by the Board that the business is a Going Concern. Summoning an EGM to notify serious loss of capital The financial statements of Commercial Credit and Finance PLC are prepared and presented in compliance with the requirements of the Companies Act No. 7 of 2007, Finance Business Act No 42 of 2011 and Sri Lankan Accounting Standards. These financial statements also comply with reporting requirements prescribed by the regulatory authorities such as Central Bank of Sri Lanka, Colombo Stock Exchange, Securities and Exchange Commission. Report of the Directors is given on pages 71 to 73 in this Annual Report. Statement of Directors responsibility for financial statements is given on page no. 77 in this Annual Report. Report of the Auditors enumerate their responsibilities in their report on the financial statements.
D.1.1
Compliant
D.1.2
Compliant
D.1.3
Compliant
D.1.4
Compliant
The Management Discussion and Analysis is given on pages 38 to 56 in this Annual Report.
D.1.5
Compliant
The declaration is given in the statement of Directors responsibility for financial reporting on page no. 79 in this Annual Report.
D.1.6
Compliant
Likelihood of such occurrence is remote. However should the situation arise an EGM will be called for and shareholders will be notified.
D.2 Internal Control The Code requires the Board to have a sound system of Internal Controls to safeguard shareholders investments and the companys assets. Annual evaluation of the Internal Control System Internal Audit Function The Company has established a comprehensive framework of policies and procedures which are regularly reviewed and updated. The Companys Audit Committee ensures that there is an effective Internal Control and Financial Reporting System. The Company has obtained a certification from the External Auditors in this regard. The Internal Audit function has been out-sourced and is carried out by two firms of Chartered Accountants.
D.2.1
Compliant
D.2.2
Compliant
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Compliance Status
Extent of Adoption
D.3 Audit Committee The Code requires the Board to have formal and transparent arrangements in selecting and applying the accountings policies, financial reporting and internal control principles and maintaining an appropriate relationship with the companys External Auditors. Composition of the Audit Committee Duties of the Audit Committee - Ensuring the objectivity and independence of External Auditors Terms and reference of Audit Committee Disclosure of the Audit Committee The Audit Committee of Commercial Credit and Finance PLC consists of three members, all of whom are Independent Non-Executive Directors. The Committee operates within clearly defined terms of reference. Details of the Committee members, invitees and the Secretary are mentioned in the Audit Committee Report.
D.3.1
Compliant
D.3.2
Compliant
The duties of the Audit Committee are mentioned in the Audit Committee Report on page no. 76 in this Annual Report.
D.3.3 D.3.4
Compliant Compliant
Audit Committee functions within its terms of reference. The names of the members of the Audit Committee are given on page no. 76 in this Annual Report.
D.4 Code of Business Conduct & Ethics Code of Business Conduct & Ethics Affirmation by the Chairman that there is no violation of the Code of Conduct & Ethics D.4.1 Compliant The Code of Business Conduct and Ethics of the Company has been approved by the Board.
D.4.2
Compliant
The Chairman hereby confirms that no major violations of the Code of Business Conduct and Ethics have been brought to his notice.
D.5 Corporate Governance Disclosure The company should disclose the extent of adoption of best practices in Corporate Governance. Disclosure of Corporate Governance D.5.1 Compliant This requirement is met through the disclosures related to Corporate Governance made in this report.
E. Institutional Investors E.1 Institutional Shareholders are required to make considered use of their votes and encouraged to ensure their voting intentions are translated into practice Communication with shareholders E.1.1 Compliant AGM is used to have an effective dialogue with the shareholders on matters which are relevant and of concern to the general membership.
E.2 Evaluation of Corporate Governance Disclosures Institutional Investors are encouraged to give due weight to all relevant factors in Board structure and composition. Corporate Governance disclosures E.2 Complaint Institutional investors have the opportunity to use the AGM to raise relevant issues which have come to their attention.
F. Other Shareholders F.1 Investing/Divesting Decision Individual Shareholder Individual Shareholders voting F.1 F.2 Compliant Compliant If the need arises individual shareholders are encouraged to carryout adequate analysis or seek independent advice on investing or divesting decisions. Individual shareholders are encouraged to participate at General Meetings and exercise their voting rights.
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Finance Companies (Corporate Governance) Direction No. 3 of 2008

Corporate Governance Principle Rule Reference Compliance Status Commercial Credits Level of Compliance
2. The Responsibilities of the Board of Directors The Board of Directors discharges its responsibilities in a manner that Commercial Credit and Finance PLC is provided with proper direction and sound leadership. Further, the Board of Directors ensures the formulation and the implementation of sound business strategies the execution of which are facilitated by the skills and experience of the Chief Executive Officer and the management team, prudent management of risks by the employment of appropriate risk management systems while ensuring integrity of information, existence of effective internal controls and effective management of stakeholder interests. Areas requiring improvements are: 2. 1(b) Linking overall strategy and the risk policy; addressing risks arising from approved strategy and proposed methods to meet the same. 2. 1(c) IRMC to present reports of findings to the Board and reporting process to be strengthen to cover all risks. 2. 1 (d) Report to be submitted to the Board on actual implementation of Stakeholder Communication Policy. 2. 1 (e) Implementation of findings from review of the Companys Internal Control Systems and Management Information System. 2. 1 (i) Discussion of weaknesses identified and implementation of changes arising from self evaluations of the Board Members. Chairman and the Chief Executive Officer are appointed by the Board and the functions and responsibilities of the said designations are separated and further defined and approved by the members of the Board of Directors. There is a procedure agreed to by the Board of Directors to obtain Independent Professional Advice where necessary at the Companys expense. Procedures have been put in place to avoid conflicts of interest and Directors abstain from voting when matters in which key or any of his relatives or a concern in which he has substantial interest is discussed. A formal schedule of matters specifically reserved for the Board is in place. No such situation is foreseen. This requirement is served by this report. Each Director provides an annual self assessment.
1. Strengthening the safety and soundness of the company
2. (1) (a) - (m)
Compliant
2. Chairman and Chief Executive Officer 3. Independent Professional Advice 4. Conflict of Interests 5. Formal schedule of matters 6. Situation of Insolvency 7. Corporate Governance Report 8. Annual self assessment by the Directors 3. Meetings of the Board 9. Board Meetings
2. (2)
Compliant
2. (3)
Compliant
2. (4)
Compliant
2. (5) 2. (6) 2. (7) 2. (8)
Compliant Compliant Compliant Compliant
3. (1)
Compliant
12 Board Meetings were held during the year at approximately monthly intervals and details of meetings and individual attendance are provided on page no. 59 in this Annual Report. Agendas of regular meetings are included with proposals from all Directors with regard to promotion of business and management of risks and other relevant areas to the progression of the Company. Meaningful discussions are facilitated at both Board Meetings and other meetings where adequate time and at least 7 days of notice is given for Directors prior to the Board Meeting and further sufficient time period is offered in studying the relevant papers and proposals. This situation has not arisen.
10. Inclusion of proposals by all Directors in the agenda
3. (2)
Compliant
11. Notice of Meetings 12. Non attendance of Directors
3. (3)
Compliant
3. (4)
Compliant
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Corporate Governance Principle 13. Board Secretary 14. Agenda for Board Meetings 15. Access to Secretary by Directors 16. Minutes of the Meeting 17. Details of Minutes 4. The Boards Composition 16. Number of Directors 17. Period of service of a Director 18. Appointment of an employee as a Director 19. Independent NonExecutive Directors 20. Alternative Director 21. Credibility, skills and experience of Non-Executive Directors 22. Presence of NonExecutive Directors in Board Meetings 23. Details of Directors 24. Appointment of new Directors 25. Appointment to fill a Casual Vacancy 26. Resignation/removal of a Director
Rule Reference 3. (5) 3. (6)
Compliance Status Compliant Complaint
Commercial Credits Level of Compliance In carrying out the secretarial functions and other functions required by the statutes the Board has appointed the Board Secretary. Company Secretary prepares the agenda for the Board meeting and the Chairman approves the same. All the Directors have access to advice and services of the Company Secretary with a view to ensuring that Board procedures and all applicable laws, directions, rules and regulations are followed. The Company Secretary maintains the Minutes of Board Meetings and such Minutes are open for inspection by any Director. Minutes of the Board Meetings are maintained in sufficient detail by the Board Secretary.
3. (7)
Complaint
3. (8) 3. (9)
Complaint Complaint
4. (1) 4. (2)
Complaint Complaint
The Board comprises of 8 Directors. There was one Non-Executive Director who had served on the Board for more than 9 years and he was appointed as an Executive Director with the approval of the Central Bank of Sri Lanka. Executive Directors were appointed subject to the provisions of this Direction. 5 out of 8 Directors are Independent Non-Executive Directors. No such situation has arisen during the financial year. Profiles of the Non-Executive Directors are included on pages 26 to 28 in this Annual Report. Except for months of April, May and October 2011 the Non-Executive Directors were more than 50% of the quorum. Details of Directors are included on pages 26 to 28 in this Annual Report. The Board has a formal and transparent procedure in place when appointing Directors and for their succession. Directors appointed to fill a casual vacancy are subject to election at the first General Meeting after such appointment. The Board announces such situations to the shareholders at the AGM and Directors resignations and the reasons for such resignations are duly informed to the Central Bank of Sri Lanka and Colombo Stock Exchange.
4. (3) 4. (4) (a) to (f) 4. (5) 4. (6)
Complaint Complaint Complaint Complaint
4. (7) 4. (8) 4. (9) 4. (10)
Complaint Complaint Complaint Complaint
4. (11)
Complaint
5. Criteria to Assess the Fitness and Propriety of Directors 27. Directors over 70 Years of age 28. Holding in office in more than 20 Companies 5. (1) Complaint None of the Directors have reached the age of 70 years except for one Director who was over the age of 70 years resigned with effect from on 31.12.2011. No Director holds Directorship in more than 20 Companies/Societies and no Director holds office of a Director or any other equivalent position in more than 10 Companies that are classified as Specified Business Entities in terms of the Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995.
5. (2)
Complaint
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Rule Reference
Compliance Status
Commercial Credits Level of Compliance
6. Management Function Delegated by the Board 29. Delegation of work to the management Evaluation of the delegation process 6.(1) 6.(2) Complaint Complaint The Board has not delegated any matters to an extent that will impair their ability as a whole to discharge their functions. The delegation process is periodically reviewed.
7. The Chairman and the Chief Executive Officer 30. Division of Responsibilities of the Chairman and the Chief Executive Officer 31. Chairman shall be a Non-Executive Director, and if not designate a Senior Director 32. Relationship between the Chairman and the Chief Executive Officer and other Directors 33. Role of the Chairman Role of the Chief Executive Officer The role of Chairman and Chief Executive Officer is separated and held by two individuals appointed by the Board.
7. (1)
Complaint
7. (2)
Complaint
Chairman is an Independent Non-Executive Director.
7. (3)
Complaint
The Chairman has no financial or other relationship with any other member of the Board. The Chief Executive Officer also does not have any financial or other relationship with any member of Board except for one Executive Director who is his spouse. The names of the Chairman and the Chief Executive Officer are given in this Annual Report. The requirements specified are adhered to by the Chairman in discharging his duties. The requirements specified are adhered to by the Chief Executive Officer in discharging his duties.
7. (4) to 7.(10) 7.(11)
Complaint Complaint
8. Board Appointed Committees 34. Board appointed two Sub Committees 8. (1) Complaint Audit Committee and Integrated Risk Management Committee are functioning as per the requirements of the Direction. Minutes of meetings of the Sub Committees are submitted to the board in place of reports. Please refer the report of the Audit Committee on page no. 76 in this Annual Report. Areas requiring improvements are: 8. 2(e) Implementation of a policy regarding obtaining non audit services from External Auditors. 8. 2(g) Currently the Board Audit Committee reviews the financial information of the Company. However a formal process is to be introduced. 8. 2(h) Board Audit Committee has not met the External Auditors without the Executive Management as no such request has been made. Please refer the report of the Integrated Risk Management Committee on page no. 78 in this Annual Report. Areas requiring improvements are: 8. 3(b) Strengthening of the existing process of the assessment of risks covering all financial and non financial aspects. 8. 3(c)/(d) Establishment of quantitative and qualitative risk limits for the various management Sub Committees and strengthen available process to review these risks periodically. 8. 3(f) Implementation of a disciplinary action process related to failures by officers to identify specific risks. 8. 3(g) Minutes of meetings of the Sub Committee are submitted to the Board in place of reports. 8. 3(h) Further strengthening the monitoring of compliance with laws and regulations, and Internal Controls and approved policies.
Audit Committee
8. (2) (a) - (q)
Complaint
Integrated Risk Management Committee
8.(3) (a) - (h)
Complaint
69
Corporate Governance Principle 9. Related Party Transactions
Rule Reference
Compliance Status
Commercial Credits Level of Compliance
35. Avoiding conflicts of interest in related party transaction and favourable treatment
9. (1) to 9. (4)
The Board has taken necessary steps to avoid any conflicts of interest that may arise, in transacting with related parties as per the definition of this Direction. The Board also ensures that no related party benefits from favourable treatment. Complaint Areas requiring improvements are, strengthening of the process of monitoring, reporting, retrieving related party transactions through the service network and ensuring that more favourable treatment is not given.
10. Disclosures 36. Financial reporting, statutory and regulatory reporting 37. Minimum disclosure in the Annual Report 11. Transitional Provisions 38. Transitional and other General Provisions 11. (1) to 11. (6) Complaint The Company has complied with transitional provisions. 10. (1) 10. (2) (a) to (j) Complaint Financial statements for the year ended 31.03.2012 are in conformity with all rules and regulatory requirements and have been published in Sinhala, Tamil and English newspapers. All required disclosures have been made in the Annual Report.
Complaint
70
Report of the Board of Directors on the Affairs of the Company

The Directors have pleasure in presenting to the shareholders the Annual Report of the Board of Directors for the year ended 31st March, 2012. This report contains information required by Section 168 of the Companies Act No. 7 of 2007 and other necessary information required by the Listing Rules of Colombo Stock Exchange.
Accounting Policies
The Directors consider that, in preparing these financial statements, suitable accounting policies have been used which are applied consistently and supported by reasonable and prudent judgment and that all applicable accounting standards have been followed. The financial statements are prepared on a going concern basis.
Principal Activities
The principal activities of the Company were acceptance of deposits, granting lease facilities, hire purchase, personal loans, micro loans, pawning, other credit facilities, real estate development and related services.
A description of the Companys Corporate Governance practices is set out on pages 58 to 70 in this Annual Report.
Directorate
The names of the Directors as at date and changes to the Directorate during the period under review are set out below: Mr Kalugamage John Cecil Perera Mr Roshan Sanjaya Egodage Mr George Ginendra Hemachandra Mr Ihala Gamaralalage Samantha Kumara Gunaratne Mrs Geya Rasi Egodage Mr Thirunavukarasu Someswaran Mr Mihindukulasooriya Susantha Devapriya Pinto Dr. (Mrs) Erasha Fernando - Appointed w.e.f 11th January, 2012 Mrs Vagdevi Wimalangi Fernando - Resigned w.e.f 31st December, 2011 In terms of Article 24 (6) of the Articles of Association of the Company Mrs Geya Rasi Egodage, Director, retires by rotation and being eligible is recommended by the Board of Directors for re-election by the Members at the Annual General Meeting for the year 2012. In terms of Article 24 (6) of the Articles of Association of the Company Mr Ihala Gamaralalage Samantha Kumara Gunaratne, Director, retires by rotation and being eligible is recommended by the Board of Directors for re-election by the Members at the Annual General Meeting for the year 2012.
Changes to the nature of Business

There were no significant changes to the principle activities of the Company during the Financial Year Ended 31st March, 2012.
The Financial Statements for the Year ended 31st March, 2012 are set out on pages 86 to 118 in this Annual Report.
Auditors Report
The Auditors Report on the financial statements for the year ended 31st March, 2012 is set out on page no. 85 in this Annual Report.
Directors Responsibility for the Financial Statements

The Directors are responsible for preparing and presenting the financial statements, which are set-out on pages 86 to 118 in this Annual Report. The financial statements which have been prepared in conformity with the Sri Lanka Accounting Standards as laid down by the Institute of Chartered Accountants of Sri Lanka, Companies Act No. 7 of 2007 and the Listing Rules of the Colombo Stock Exchange. The Directors are satisfied that the financial statements give a true and fair view of the state of affairs of the Company as well as the profit for the year then ended.
71
In terms of Article 24 (2) of the Articles of Association of the Company Dr. (Mrs) Erasha Fernando, Director, retires and being eligible is recommended by the Board of Directors for election by the Members at the Annual General Meeting for the year 2012.
Company other than as given below: Director Mr R S Egodage Mrs G R Egodage Dr. (Mrs) E Fernando Fixed Fixed Interest Depositis Deposits paid on Accepted Outstanding Fixed during as at 31st Deposits the year March, 2012 (Rs.) (Rs.) (Rs.) 1,500,000 1,589,123 NIL 1,700,000 1,700,000 52,062 1,900,000 2,259,692 11,500
Board Sub-Committees
The following Board Sub-Committees have been established by the Company:
Audit Committee
Mr Thirunavukarasu Someswaran - Chairman Mr Cecil Perera Mr Samantha Gunaratne
No accommodations have been granted to and remain outstanding from any Director of the Company.
Remuneration Committee
Mr Samantha Gunaratne - Chairman Mr Cecil Perera Mr George Hemachandra (resigned w.e.f. 11th January, 2012 upon being elected an Executive Director)
Directors Shareholding
The shares held by the Directors at the beginning and at the end of the financial year were as follows. (The Articles of Association of the Company do not stipulate a share qualification for Directors): 31.03.2012 31.03.2011 7,427,520 -

Mr Cecil Perera - Chairman Mr Thirunavukarasu Someswaran - Director Mr Roshan Egodage - Director Mr Samantha Gunaratne - Director Mr Shriyantha Perera - Chief Operating Officer Mr Andrew Samuel - DGM - Corporate Planning Mr Janaka Deshapriya - Chief Financial Officer Mr Sebastian Nanayakkara - DGM - Recoveries Ms Vathsala Sathiyakeerthi - Manager - Treasury The Reports of the Board Audit, Remuneration and Integrated Risk Management Sub Committees are set out on pages 76, 77 and 78 in this Annual Report. The composition of the above Board Sub-Committees, and their functions and responsibilities are set out in the Corporate Governance Report appearing on pages 76, 77 and 78 in this Annual Report.
Mr George Ginendra Hemachandra 7,427,520 Mr I G Samantha Kumara Gunaratne 98,438 Dr. (Mrs) Erasha Fernando 533,350 Mr Roshan Sanjaya Egodage - Mrs Geya Rasi Egodage - Mr Thirunavukarasu Someswaran - Mr Kalugamage John Cecil Perera - Mr M Susantha Devapriya Pinto -
Directors Fees and Emoluments

Directors fees and emoluments for the Financial Year Ended 31st March, 2012, are as follows: Directors fees and emoluments Rs. 16,428,082/(2011: Rs 9,672,177/-)
Donations
During the year the Company has made Rs. 1,126,128/- as charitable contributions. (2011: Rs. 940,032/-)
Interest Register
An Interest Register is being maintained by the Company as required in terms of the Companies Act No. 7 of 2007. The Directors did not have any interests in contracts of the
72
Property, Plant & Equipment

The details of the property, plant & equipment of the Company, additions during the year and the depreciation charges for the year are shown in note no. 11 to the financial statements. The Directors consider the market value of the property, plant & equipment not to be significantly different to the amounts disclosed.
Auditors
The financial statements for the period under review have been audited by Messrs Ernst & Young Chartered Accountants. Rs. 3,283,750/- has been paid as Audit Fee for the year ended 31st March, 2012. (2011: Rs. 2,300,000/-) A Resolution re-appointing Messrs Ernst & Young as the Auditors of the Company and authorising the Directors to determine their remuneration will be proposed at the Annual General Meeting.
Stated Capital
There has been no change in the Stated Capital of the Company during the year under review. The Stated Capital of the Company as at 31st March, 2012 was Rs. 170,640,315/consisting of 218,074,365 Ordinary Shares. The shares of the Company are listed on the Colombo Stock Exchange.
Auditors Relationship with the Company

The Company did not have any relationship with the Auditors Messrs Ernst & Young, Chartered Accountants, other than that of the Auditor, during the Financial Year Ended 31st March, 2012, except for other professional services obtained in relation to the evaluation of the Companys IT System and Corporate Governance. The fees paid for these non audit services amounted to Rs. 4,697,620/- . (2011: Nil) By Order of the Board,
Shareholders
The total shareholder base of the Company as at 31st March, 2012 was 1,558 (2011: 214). The distribution of the shareholding and a list of the 20 major shareholders are given under Investor Information on pages 120 to 121 in this Annual Report.
Dividends
The Directors of the Company have recommended a payment of a First and Final Dividend of Rs. 1.00 per share for the Financial Year Ended 31st March 2012. The Directors have taken appropriate measures to obtain a report in terms of Section 56 (2) of the Companies Act No. 7 of 2007 from the Companys Auditors confirming that the Company will immediately after the payment of the Dividend, satisfy the solvency test.
Secretary JACEY & COMPANY Secretaries
K J Cecil Perera Director
Statutory Payments
The Directors, to the best of their knowledge and belief are satisfied that all statutory payments in relation to the Government had been made up to date
I G Samantha Kumara Gunaratne Director
Post Balance Sheet Events

No circumstances have arisen since the Balance Sheet date, which would require adjustment to, or disclosure in the financial statements. Refer information on proposed Dividend given above. 20th August, 2012
Compliance
We certify that the Company complies with prudential requirements, regulations, laws and internal controls and are taking measures to rectify any non-compliance.
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Risk Management
Financial service institutions today operate in an intensely complex and competitive global market where convergence, consolidation, globalization and a rapidly changing regulatory environment pose numerous challenges. The ability to manage these multiple risk factors across multiple locations, product categories, asset classes, customer segments and functional departments determines the degree of success and sustainability of each entity.
Risk Management Process

A comprehensive Risk Management process has been developed and is continuously reviewed by the Integrated Risk Management Committee (IRMC) together with the senior management. The Risk Management process of the Company can be elaborated as follows:
Risk Management Process

Establish the Context Identify the Risk Analyse the Risk Evaluate the Risk Risk Treatment Monitoring and Control
Techniques of Risk Management

Risk is inherent in the complex and volatile Sri Lankan financial market, and Commercial Credit has made efforts to diligently manage its risks. Risk Management has been instilled in to the core of every activity undertaken by Commercial Credit; the Risk Management process encompasses the identification, measurement, monitoring and controlling of each risk. At Commercial Credit, the Risk Management framework is designed to ensure that the Company can take well calculated business decisions to safeguard capital, funding sources and profitability from various sources of risk. This system permits the creation of risk awareness across the entire Company to identify, measure, analyse and evaluate risks and to set appropriate policies according to the risk appetite in order to manage and hedge such identified risks. The activities of Commercial Credits Risk Management system take place at three broad levels of hierarchy, as follows:
I Te nfo ch rm no at lo ion gy a Fl nd ow
Staff
n Fu d Fl ow
Regulatory Framework
Government
Shareholding and Board
Clients
Business Partners/ Service Providers
Strategic Level:
Encompasses Risk Management functions performed by senior management and Risk Committee. Tasks include definition of risks, ascertaining institutions risk appetite, formulating strategy and policies for managing risks and establish adequate systems and controls to ensure that overall risk remain within acceptable levels.
Risk Sub Committees

Risk Sub Committees have been formed to ensure Risk Management is decentralized throughout the organization. Six risk Sub Committees - Assets and Liabilities Committee (ALCO), Credit, Human Resource, Legal and Collection, Information Technology and Fixed Deposits have carried out in depth analysis of risk aspects. These committees comprise of selected members of the senior management and executives of each relevant department and they are guided by the IRMC. Sub Committees are responsible for identifying, analyzing, managing and controlling possible risks. The identified risks are taken up for discussion at monthly risk Sub Committee meetings and necessary measures are taken to deal with such risks. The minutes of the Sub Committee meetings are circulated among the Board members of the IRMC. The effectiveness of these committees will be assessed by the IRMC and the Board.
Management Level:
Encompasses Risk Management within a business area or across business lines. Generally the Risk Management activities performed by middle management or units devoted to risk reviews fall into this category.
Operational Level:
This encompasses Risk Management activities performed by individuals who take risks on organizations behalf, such as front office personnel and loan origination personnel.
74
As
se
tF
lo
w Fl ow
H um an
Types of Risks
In achieving the Companys desired objectives Commercial Credit is exposed to several risks which have been categorized as follows: Credit Risk: Defined as the potential risk that the counterparties of Commercial Credit fail to fulfill their agreed obligations. This is a risk faced by all financial institutions in general. Mitigation: Special attention is given to Credit Risk Management in terms of analyzing customer credit worthiness through rigorous customer investigation before and after credit facilities are provided. The Company invests only in quality stocks which have significant market value in order to minimize the recovery losses in case of defaults. Market Risk: Market risk can be defined as the risk arising from fluctuations in interest rates, foreign currencies, equity prices and commodity prices. Mitigation: Staff involved in Risk Management are capable of predicting probable risks of market fluctuations through analysis carried out utilizing various available market information. Sensitivity Analysis is undertaken to understand the impact on various factors and their interrelations. Liquidity Risk: Liquidity risk is defined as the risk of only being able to meet liquidity obligations at increased cost or, ultimately, being unable to meet obligations as they fall due. Mitigation: Special attention is focused on the liquidity of the Company as it provides critical defence for several other risks such as reputational, compliance, and financial risks. A Liquidity Policy has been developed and integrated in to Risk Policy to provide necessary guidelines. Operational Risk: Operational risk can be defined as the risk of loss resulting from inadequate or failed processes, people and systems from internal and external events. Mitigation: Sound operational processes have been put in place, to be followed by staff to mitigate operational risks with the employment of an effective control system combined with adequate monitoring by higher levels of management. Reputational Risk: Reputational risk can be defined as the risk arising from negative perception among customers, counterparties, shareholders, investors or any other stakeholder that can adversely affect the Companys ability to maintain existing or establish new business relationships and continued access to sources of funding.
Mitigation: Enhancing the Companys brand image through well thought out marketing strategies while other initiatives such as value driven culture and customer confidence building measures are employed to enlarge the reputation of the Company.
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Report of the Board Audit Committee

The role of the Audit Committee is to monitor the financial reporting systems and thereby ensuring the integrity of the financial statements, monitor compliance with company policy, legal and regulatory requirements and to review and strengthen the systems and procedures of Internal Control and management of risks, with a view to safeguarding the interests of the shareholders and all other stakeholders. The Audit Committee is comprised of three members who are Independent Non-Executive Directors: Mr T Someswaran Chairman Mr C Perera Mr S Gunaratne Five meetings of the Committee were held during the period under review and attendance of the members at these meetings is given on page no. 59 in this Annual Report. The Committee discusses reports of Internal and External Auditors at these meetings. Minutes of each Audit Committee meeting are circulated to the Board and any matters arising therefrom discussed at Board Meetings. The Companys External and Internal Auditors are also invited to participate at these meetings whenever their presence is required. The Chief Executive Officer, Chief Financial Officer and other senior management of the Company attended the meetings by invitation. The Audit Committee has also reviewed and discussed the Companys annual financial statements with the management and the External Auditors prior to publication. In the case of interim financial statements, the Audit Committee has reviewed and discussed same with the management prior to publication.
T Someswaran Chairman Audit Committee 20th August, 2012
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Report of the Remuneration Committee

The Remuneration Committee appointed by the Board comprises of Mr S Gunaratne and Mr C Perera who are Independent Non-Executive Directors. The Committee is headed by Mr S Gunaratne. The primary purpose of the Remuneration Committee is to review the performance of the Executive Directors and the Chief Executive Officer and to recommend appropriate remuneration benefits and other payments. The Minutes of the Committee meetings are circulated to all members of the Board. The recommendations made by the Committee are discussed at Board Meetings, and the final determination based on such recommendations is made by the Board of Directors. The Committee held two meetings during the period under review and attendance of the members at these meetings are given on page no. 59 in this Annual Report. The aggregate remuneration paid to the Directors during the period under review is given in the Report of the Directors.
I G Samantha Kumara Gunaratne Chairman Remuneration Committee 20th August, 2011
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Report of the Board Integrated Risk Management Committee

The Boards Integrated Risk Management Committee (IRMC) is responsible for determining the Companys Risk Management Policy and overall strategies and ensuring that procedures at Board and management level are in place to identify, monitor and mitigate risk to safeguard the Companys assets and interests by clearly communicating that policy and those strategies to the management. The corporate management is responsible for identifying relevant risks and notifying the IRMC, who will in turn make decisions on behalf of the Board within the framework of the authority and responsibility assigned to the IRMC by the Board. The IRMC is made up of three Non-Executive Directors, Chief Executive Officer and members of the corporate management supervising broad risk categories: Mr C Perera - Mr R S Egodage - Mr T Someswaran - Mr S Gunaratne - Mr S Perera - Mr J Deshapriya - Mr A Samuel - Mr S Nanayakkara - Ms V Sathiyakeerthi - Chairman Director/Chief Executive Officer Director Director Chief Operating Officer Chief Financial Officer DGM - Corporate Planning DGM - Recoveries Manager - Treasury The role of the IRMC covers the following areas: Assess all risks, i.e, credit, market, liquidity, operational and reputational on a monthly basis through risk indicators and management information. Review the adequacy and effectiveness of all management level committees such as the Credit Committee and the Assets and Liability Committee in addressing specific risk and manage those risks within qualitative and quantitative risk limits as specified by the Committee. Take prompt corrective actions to mitigate the effects of specific risks in the case such risks are at levels beyond the prudent levels decided by the Committee. Assess all aspects of Risk Management including updated business continuity plans periodically. Take appropriate actions against the officers responsible for failure to identify specific risks and take prompt corrective actions. The Board is briefed on matters discussed at the IRMC seeking the Boards views, concurrence and specific directions. Establish a compliance function to assess the Companys compliance with laws, regulations, directions, rules, regulatory guidelines, internal control and approved policies on all areas of business operations.
Five (05) meetings of the IRMC were held during the period under review and attendance of the members at these meetings is given on page no. 59 in this Annual Report. The Committee mainly discusses matters arising from minutes of the meetings of Sub Committees formed under the purview of the IRMC (i.e Asset Liability, Credit, Fixed Deposit, Collection & Legal, Human Resource and IT Committees), and any other matter that should arise with regard to risks of the Company. The Board is briefed on matters discussed at each IRMC Meeting.
K J Cecil Perera Chairman - Integrated Risk Management Committee 20th August, 2012
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Directors Responsibility for Financial Reporting

This Statement of Directors Responsibilities is to be read in conjunction with the Auditors Report and is made to distinguish the respective responsibilities of the Directors and of the Auditors in relation to the financial statements contained in this Annual Report. The Directors of the Company are required by the Companies Act No. 7 of 2007 to prepare financial statements which give a true and fair view of the state of affairs of the Company as at the end of the financial year, and of the Profit and Loss and of the Cash Flow of the Company for the financial year. The Directors confirm that the financial statements of the Company for the year ended 31st March, 2012 presented in the Report have been prepared in accordance with the Sri Lanka Accounting Standards and the Companies Act No. 7 of 2007. In preparing the financial statements, the Directors have selected the appropriate accounting policies and have applied them consistently. Reasonable and prudent judgments and estimates have been made and applicable accounting standards have been followed and the financial statements have been prepared on a going concern basis. The Directors are of the view that adequate funds and other resources are available for the Company to continue in operation as a going concern for the foreseeable future. The Directors have taken all reasonable steps expected of them to safeguard the assets of the Company and to establish appropriate Systems of Internal Controls in order to prevent, deter and detect any fraud, misappropriation or other irregularities. The Directors have also taken all reasonable steps to ensure that the Company maintains adequate and accurate accounting books of record which reflect the transparency of transactions and provide an accurate disclosure of the Companys financial position. The Directors are required to provide the Auditors with every opportunity to take whatever steps and undertake whatever inspection they consider appropriate for the purpose of enabling them to give their Audit Report. The Directors are of the view that they have discharged their responsibilities in this regard.
Compliance Report
The Directors confirm that, to the best of their knowledge, all taxes and levies payable by the Company and all contributions, levies and taxes payable on behalf of the employees of the Company, and all other known statutory obligations as at the balance sheet date have been paid or provided for in the financial statements. By Order of the Board,
JACEY & COMPANY Secretaries 20th August, 2012
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Directors Statement on Internal Control over Financial Reporting

Responsibility
In line with Section 10 (2) (b) of the Finance Companies (Corporate Governance) Direction No. 3 of 2008, the Board of Directors presents this report on Internal Control over Financial Reporting. The Board of Directors (Board) is responsible for the adequacy and effectiveness of the Commercial Credit & Finance PLCs (the Company) System of Internal Controls over Financial Reporting. However, such a system is also designed to manage the Companys key areas of risk within an acceptable risk profile, rather than to completely eliminate the risk of failure to achieve the policies and business objectives of the Company . Accordingly, the System of Internal Controls can only provide reasonable but not absolute assurance against material misstatement of management and financial information and records or against financial losses or fraud. The Board has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Company and this process includes enhancing the System of Internal Controls as and when there are changes to business environment or regulatory guidelines. The process is regularly reviewed by the Board .The Board has assessed the Internal Control System taking into account principles for the assessment of Internal Control System. The Board is of the view that the System of Internal Controls in place is fair and adequate to provide reasonable assurance regarding the reliability of financial reporting, and that the preparation of financial statements for external purposes and is largely in accordance with relevant accounting principles and regulatory requirements. The management assists the Board in the implementation of the Boards policies and procedures on risk and control by identifying and assessing the risks faced, and in the design, operation and monitoring of suitable Internal Controls to mitigate and control these risks.
Key Features of the Process Adopted in Applying and Reviewing the Design and Effectiveness of the Internal Control System
The key processes that have been established in reviewing the adequacy and integrity of the System of Internal Controls with respect to financial reporting include the following: Various Committees are established by the Board to assist the Board in ensuring the effectiveness of Company s daily operations and that the Company s operations are in accordance with the corporate objectives, strategies and the annual budget as well as the policies and business directions that have been approved. The Internal Auditors of the Company check for compliance with policies and procedures and the effectiveness of the Internal Control Systems on an ongoing basis using samples and rotational procedures and highlight significant findings in respect of any non-compliance. Audits are carried out on units and branches, the frequency of which is determined by the level of risk assessed, to provide an independent and objective report. Findings of the internal audits are submitted to the Audit Committee for review at their periodic meetings. The Audit Committee of the Company review internal control issues identified by the respective Internal Auditors, regulatory authorities and management, and evaluates the adequacy and effectiveness of the Internal Control System over financial reporting. They also review the internal audit functions with particular emphasis on the scope of audits and quality of internal audits. Further details of the activities undertaken by the Audit Committee of the Company are set out in the Audit Committee Report on page no. 76 in this Annual Report. In assessing the Internal Control System, officers of the Company collated all procedures and controls that are connected with significant accounts and disclosures of the financial statements of the Company. These in turn were observed and checked by the Internal Auditors for suitability of design and effectiveness on an ongoing basis. Due to time constraints, areas with respect to the processes that provided disclosures to the financial statements such as related party transactions, maturity analysis, segmental reporting, contingencies and commitments were not fully completed.
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Comments if any made by the External Auditors in connection with the Internal Control System will be dealt with as and when such comments are made.
Confirmation
Based on the above processes, the Board confirms that the financial reporting system of the Company has been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes has been done in accordance with Sri Lanka Accounting Standards and regulatory requirements of the Central Bank of Sri Lanka.
Review of the Statement by External Auditors

The External Auditors have reviewed the above Directors Statement on Internal Control included in the Annual Report of the Company for the year ended 31st March 2012 and reported to the Board. By Order of the Board,
K J Cecil Perera Chairman
R S Egodage Director/Chief Executive Officer
T Someswaran Director/Chairman of Audit Committee
20th August, 2012
81
82
84
85
[Balance Sheet]
As at 31 March 2012 Note Cash and Bank Balances Treasury Bills 3 Reverse Repurchase agreements Placements with Other Banks 4 Loans and Advances 5 Lease Rentals Receivable and Stock out on Hire 6 Real Estate and Vehicle Stock 8 Other Debtors, Deposits and Prepayments 9 Investment Securities 10 Dealing Securities 10.1 Property, Plant and Equipment 11.3 Leasehold Property 12 Investment Property 13 Total Assets LIABILITIES Deposits from Customers 14 Borrowings 15 Other Liabilities 17 Tax Payable Employment Benefit Liability 18 Deferred Tax Liability 27.2 Total Liabilities 6,755,713,528 1,517,720,558 679,094,587 186,631,023 17,843,334 131,396,509 9,288,399,539 3,840,492,289 594,985,722 426,937,260 33,133,613 13,489,412 9,003,099 4,918,041,395 2012 2011 Rs. Rs. 203,708,480 66,969,364 10,000,000 110,559,966 1,944,228,721 2,490,821,145 152,841,458 67,103,855 5,426,900 24,939,856 238,531,843 9,047,039 26,000,000 5,350,178,628
ASSETS 140,960,720 83,558,090 163,173,162 365,372,426 4,532,025,385 4,115,595,874 383,018,079 155,789,945 201,900 39,698,127 290,504,802 8,924,822 200,000,000 10,478,823,332
SHAREHOLDERS FUNDS Stated Capital Reserves 19 20 170,640,315 1,019,783,478 1,190,423,793 10,478,823,332 11,813,579 170,640,315 261,496,919 432,137,234 5,350,178,628 11,955,027
Total Equity Total Equity and Liabilities Commitments and Contingencies
These Financial Statements are in compliance with the requirements of the Companies Act No. 07 of 2007 . _______________________________ M A D J Deshapriya Chief Financial Officer The Board of Directors is responsible for the preparation and presentation of the Financial Statements. Signed for and on behalf of the board by; _______________________________ _______________________________ K J C Perera R S Egodage Chairman Director/Chief Executive Officer The Accounting Policies and notes on pages 90 through 118 form an integral part of the Financial Statements. 27 June 2012 Colombo
86
[Income Statement]
Year ended 31 March 2012 Note Income Interest Income Interest Expense 21 22 23 2012 2011 Rs. Rs. 1,254,391,240 1,112,597,093 410,109,443 702,487,651 71,883,738 69,910,410 4,000,000
2,765,858,538 2,470,103,551 699,105,563 1,770,997,988 126,557,260 169,197,727 110,428,860
Net Interest Income Net Income from Real Estate Other Operating Income 24 Change in Fair Value of Investment Property 13 Less: Operating Expenses Staff Costs Provision for Staff Retirement Benefits General and Administration Expenses Provision for Fall in Value of Investments, Bad and Doubtful Loans and Write Offs 25 Profit from Operations 26 Value Added Tax on Financial Services Profit Before Taxation Income Tax Expense 27 Profit for the year Earnings Per Share 28
486,221,138 7,543,522 387,575,858 127,968,110 1,167,873,207 83,327,031 1,084,546,176 326,259,616 758,286,560 3.48
291,573,186 4,439,162 201,310,791 69,048,638 281,910,022 37,543,728 244,366,294 184,271,909 60,094,385 0.28
The Accounting Policies and notes on pages 90 through 118 form an integral part of the Financial Statements.
87
88
170,640,315 - - - 170,640,315 122,799,764 122,799,764 - - - 58,751,125 - - - 58,751,125 73,013,637 - 152,000,000 - 225,013,637 8,318,520 (1,386,127) - 758,286,560 - (152,000,000) 55,551,354 (55,551,354) 63,869,874 432,137,234 758,286,560 549,349,078 1,190,423,793
[Changes in Equity]
Year ended 31 March 2012
Stated Revaluation General Reserve Investment Accumulated Total Capital Reserve Reserve Fund Fund Reserve Profit/ (Loss) Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Balance as at 1 April 2010 73,718,375 74,603,594 58,751,125 50,294,760 - (30,443,115) 226,924,739 Net Profit for the year - - - 60,094,385 60,094,385 Share Issue 96,921,940 - - - 96,921,940 Surplus on Revaluation of Property, Plant & Equipment - 49,892,181 - - - - 49,892,181 Transferred to Reserve Fund - 2008/09 - 1,500,000 - (1,500,000) - 2009/10 9,200,000 (9,200,000) - 2010/11 12,018,877 (12,018,877) Tax effect of item transferred from Deferred Tax Liability (1,696,011) - - - - (1,696,011) Transferred to Investment Fund Reserve - - - - 8,318,520 (8,318,520) -
Balance as at 31 March 2011 Net Profit for the year Transferred to Reserve Fund Transferred to Investment Fund Reserve -
Balance as at 31 March 2012
[Cash Flow Statement]

year ended 31 March 2012 Note Cash Flows From / (Used in) Operating Activities Profit before Tax Adjustments for Depreciation 11.2 Amortization of Lease Hold Property 12 Provision for Doubtful Debts 25 Increase in Fair Value of Investment Property 13 Provision for fall in Market Value of Quoted Shares 10.1 Provision for fall in Market Value of Real Estate Stocks Profit from Sale of Property, Plant and Equipment 24 Profit from Sale of dealing Serurities Provision for Employement Benefit Plan 18.1 Notional Tax Credit on Interest on Treasury Bills Profit from operation before Working Capital Changes Increase in Real Estate and Vehicle Stock Increase in Lease Rentals Receivable and Stock out on hire (Increase)/Decrease in Government of Sri Lanka Treasury Bills Increase in Loans and Advances Increase in Other Debtors, Deposits, Prepayments Increase in Placements with Banks Increase in Deposits from Non Bank Customers Increase in Other Liabilities Retirement Benefit Liabilities Paid 18 2012 Rs. 1,084,546,176 27,116,918 122,217 114,105,406 (110,428,860) 15,549,602 - (6,898,076) (2,009,056) 7,543,522 (1,415,981) 1,128,231,868 2011 Rs.
244,366,295 12,154,671 160,605 66,004,331 (4,000,000) 1,686,898 5,357,409 (3,946,176) 4,439,163 (1,219,810) 325,003,386
(230,176,621) (113,421,434) (1,721,440,451) (1,241,343,317) (16,588,726) 19,276,035 (2,605,236,348) (1,569,393,126) (87,270,109) (30,536,345) (254,812,460) (100,853,446) 2,915,221,239 2,107,534,096 252,157,327 205,090,395 (619,914,281) (3,189,600) (623,103,881) (50,368,796) (673,472,677) (398,643,757) (839,400) (399,483,157) (13,252,725) (412,735,882)
Cash Generated from Operations Net Cash Used in Operating Activities before Income Tax Payments Taxes Paid Net Cash used in Operating Activities Cash Flows from/(Used in) Investing Activities Acquisition of Property, Plant and Equipment 11.4 Acquisition of Investment Property Acquisition of Investments Proceeds from Sales of Investment securities Proceeds from Sales of Property, Plant and Equipment Net Cash Flows Used in Investing Activities Cash Flows from/(Used in) Financing Activities Proceeds from Loans Obtained Repayments of Bank Loans Payment under Finance Lease Liabilities Proceeds from Issue of Share Net Cash Flows Used in Financing Activities Net Decrease in Cash and Cash Equivalents Cash and Cash Equivalents at the beginning of the year Cash and Cash Equivalents at the end of the year 16
(83,266,727) (63,571,140) (39,660,094) 16,586,290 11,074,913 (158,836,758) 720,500,000 (128,224,243) (5,290,687) - 586,985,070 (245,324,364) 7,274,244 (238,050,120)
(35,455,993) (31,796,670) 6,865,753 (60,386,910) 395,000,000 (78,392,667) (6,842,371) 96,921,940 406,686,902 (66,435,890) 73,710,135 7,274,245
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[Notes to the Financial Statements]

1. 1.2 1.3 1.4 2.1. 2.1.1 CORPORATE INFORMATION Commercial Credit and Finance PLC is a public limited liability company incorporated and domiciled in Sri Lanka. The registered office of the Company is located at No 106, Yatinuwara Veediya, Kandy and the principal place of business is situated at the same place. The Company changed its name from Commercial Credit PLC to Commercial Credit and Finance PLC with effect from 17 May 2012. Principal Activities and Nature of Operations During the year, the principal activities of the Company were Acceptance of Deposits, Granting Lease facilities, Hire Purchase, Personnel Loans, Micro Loans, Pawning and other credit facilities, Real Estate Development and related services. Parent Enterprise and Ultimate Parent Enterprise The Companys parent entity is BG Investments (Private) Limited. In the opinion of the directors, the Companys ultimate parent undertaking and controlling party is BG Capital (Private) Limited, which is incorporated in Sri Lanka. Date of Authorization for Issue The Financial Statements of Commercial Credit and Finance PLC for the year ended 31 March 2012 was authorized for issue in accordance with a resolution of the board of directors on 27 June 2012. BASIS OF PREPARATION These financial statements presented in Sri Lankan Rupees have been prepared on a historical cost basis and prepared in Sri Lanka Rupees except when otherwise stated. Statement of Compliance The Financial Statements of Commercial Credit and Finance PLC have been prepared in accordance with Sri Lanka Accounting Standards laid down by the Institute of Chartered Accountants of Sri Lanka and are in compliance with the Companies Act No.7 of 2007 and Finance Business Act No.42 of 2011. The Directors have made an assessment of the Companys ability to continue as a going concern and they do not intend either to liquidate or to cease trading. The accounting policies have been consistently applied by the Company and, are consistent with those used in the previous year. SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS In the process of applying the Companys Accounting Policies, management is required to make judgments, apart from those involving estimations, which may have a significant effect on the amounts recognized in the Financial Statements. Further, the management is required to consider, key assumptions concerning the future and other key sources of estimation of uncertainty at the Balance Sheet date that may have a significant risk of causing material adjustments to the carrying amounts of assets and liabilities. The respective carrying amounts of assets and liabilities are given in the related Notes to the Financial Statements. The key items which involve these judgments, estimates and assumptions are discussed below: Impairment Losses on Leases, Stock out on Hire and Loans and Advances In addition to the provisions made for possible loan losses based on the parameters and directives for specific provisions on Leases, Stock out on Hire and 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 judgments by the management is required in the estimation of these amounts and such estimations are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowances. Useful lives of Property, Plant & Equipment The Company reviews the assets residual values, useful lives and methods of depreciation at each reporting date. Judgment by the management is exercised in the estimation of these values, rates, methods, and hence they are subject to uncertainty. 1.1 General
2.1.2 Going Concern
2.1.3 Comparative Information 2.2
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[Notes to the Financial Statements Continued]

Defined Benefit Plans The Defined Benefit Obligation and the related charge for the year is determined using actuarial valuation. The actuarial valuation involves making assumptions about discount rates, future salary increase, mortality rates etc. Due to the long term nature of such obligation these estimates are subject to significant uncertainty. Further details are given in Note 18 to these financial statements. Real Estate Stocks Real Estate Stocks have been accounted at cost as disclosed under accounting policy 2.3.6, the Directors have evaluated the recoverability considering the current market prices of respective stocks. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Current Taxes Income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the Commissioner General of Inland Revenue. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. The provision for income tax is based on the elements of income and expenditure as reported in the financial statements and computed in accordance with the provisions of the Inland Revenue Act. Deferred Taxation Deferred income tax is provided, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and 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. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred income tax relating to items recognised directly in equity is recognised in equity and not in the income statement. Borrowing Costs Borrowing costs are recognised as an expense in the period in which they are incurred. Loans and advances to customers are stated net of provision for bad and doubtful loans and interest not accrued to the revenue. Lease Rentals Receivable & Stock Out on Hire Assets leased to customers under agreements, which transfer substantially all the risks and rewards associated with ownership other than legal title, are classified as finance leases. Lease rentals receivable represents the total minimum lease payments due net of unearned income and allowance for doubtful recoveries. Assets sold to customers under fixed rate hire agreements, which transfer all the risks and rewards as well as the legal title at the end of such contractual period are classified as stock out on hire. Such assets are accounted for in a similar manner as finance leases. Provisions for Bad and Doubtful Debts Amounts are set aside with regard to possible losses on loans, advances, hire purchase, finance leases and operating leases in line with Finance Companies (Provision for Bad and Doubtful Debts) Direction No. 3 of 2006 issued by the Central Bank of Sri Lanka.
2.3 a)
2.3.1 Taxation
b)
2.3.2 2.3.4
2.3.3 Loans and Advances
2.3.5
91

2.3.6 2.3.8 Real Estate and Vehicle Stock Real estate stock comprises all costs of purchase, cost of conversion and other costs incurred in bringing the real estate to its saleable condition. Purchase Cost Cost of conversion Vehicle Stock is stated at cost Cash and cash equivalents are defined as cash in hand, demand deposits 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. Investments with short maturities i.e. three months or less from the date of acquisition are also treated as cash equivalents. Property, Plant and Equipment Plant and equipment is stated at cost, excluding the costs of day to day servicing, less accumulated depreciation and accumulated impairment in value. Such cost includes the cost of replacing part of the plant and equipment when that cost is incurred, if the recognition criteria are met. During the period the Company changed its method of calculating depreciation from reducing balance basis to straight line basis over a revised useful life of the assets with effect from 01 April 2011. This change in estimate was made in order to reflect fairly the pattern in which the assets economic benefits are consumed by the Company. The effect of this change is more fully described in Note 11.6 to the financial statements. Furniture and Fittings Equipment Motor Vehicles Computer Hardware Air Conditioning Telephone System Fire Protection Equipment Fixtures & Fittings 2.3.9 Leasehold Property Leasehold property is stated at recorded carrying value. Such carrying amounts are amortized over the remaining lease term or useful life of the leasehold property whichever is shorter. No further revaluation of these leasehold properties is carried out. Investment properties are measured initially at cost, including transaction costs. The carrying amounts include the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and exclude the costs of day to day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the balance sheet date. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the year in which they arise. Finance Leases where the Company is the Lessee Property, plant and equipment on finance leases, which effectively transfer, to the Company substantially all of the risks and benefits incidental to ownership of the leased item are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the income statement.
- Land cost with legal charges. - Actual Development costs
2.3.7 Cash and Cash Equivalents
15% p.a. 20% p.a. 25% p.a. 20% p.a. 20% p.a. 20% p.a. 20% p.a. 33.33% p.a.
2.3.10 Investment Property
2.3.11 Leases a)
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Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term. The depreciation policy for depreciable leased assets is consistent with that for depreciable assets that are owned as described in 2.3.8. The cost of improvements to or on leasehold property is capitalized, disclosed as leasehold improvements, and depreciated over the unexpired period of the lease or the estimated useful lives of the improvements, whichever is shorter. Investments in Government Securities Current investments include Government of Sri Lanka Treasury Bills which are stated at cost plus a portion of discount or premium. Investments in Dealing Securities Investments in dealing securities are carried at the lower of cost and market value, determined on the basis of aggregate portfolio. Unrealised losses arising from reduction to market value and reversals of such reduction required to state current investments at lower of cost and market value are included in income statement. Investment Securities Investment securities are stated at cost. The carrying amount of investment securities is reduced to recognise a decline other than temporary in the value of investments, determined on an individual investment basis. Disposal of Investment On disposal of an investment, the difference between the proceeds and the carrying amounts is recognised as income or expense. Defined Benefit Plan Gratuity The Company measures the present value of the promised retirement benefits for gratuity, which is a defined benefit plan with the advice of an independent professional actuary using the Projected Unit credit Method (PUC) as required by Sri Lanka Accounting Standards No.16, Employee Benefit (Revised 2006). The item is stated under Retirement Benefit Liability in the Balance Sheet. Recognition of Actuarial Gains and Losses Actuarial gains & losses are recognized as income or expenses when the net cumulative unrecognized actuarial gains & losses at the end of the previous reporting period exceeded 10% of the higher of the defined benefit obligation and the fair value of plan assets at the date. The gains/losses are recognized over the expected average remaining working lives of the employees participating in the plan. Funding Arrangement The Gratuity liability is not externally funded. Defined Contribution Plans Employees Provident Fund & 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 15% and 3% of salaries and other entitled allowances of employees to Employees Provident Fund and Employees Trust Fund respectively. Provisions are recognized when the company has a present obligation (legal or constructive) as a result of a past event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as an interest expense.
2.3.12 Investments a) b) c) a)
2.3.13 Employment Benefit Obligations
b)
2.3.14 Provisions
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2.3.15 Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable net of trade discounts and sales taxes. The following specific criteria are used for the purpose of recognition of revenue. Income from leasing activities and hire purchase agreements Income from Finance leases is recognised on the basis of the financing method. The excess of aggregate rental receivable over the cost of the leased assets constitute the total unearned income at the commencement of the contract. The earned income is taken into revenue over the term of the lease, commencing from the month in which the lease is executed, in proportion to the declining receivable balance of the lease. Income from operating leases is recognised on a straight line basis over the term of the lease. Income arising from the residual interest in hire purchase agreements is credited to the profit and loss account as it accrues in proportion to the declining receivable balance of the agreement. However, accrual of income both from leases and hire purchase agreements ceases when the account is overdue for more than six months in compliance with Direction No. 15 of 1991 (Accrued Interest) and thereafter recognised on a cash basis. Interest Income from Loans and Advances Interest income from loans and advances is recognised on an accrual basis. However, income from loans and advances ceases when the account is overdue for more than six months in compliance with Direction No. 15 of 1991 (Accrued Interest) and thereafter recognised on a cash basis. Interest income from other sources Interest income from Government of Sri Lanka Treasury Bills is recognised on a time proportion basis, and discounts on purchase are amortised to income on a straight line basis over periods to maturity. Income from all other interest bearing investments is recognised as revenue on an accrual basis. Dividend Income Dividend income is recognised on a cash received basis. Overdue Interests Overdue interest income from leasing and other loans have been accounted for on a cash received basis. Real Estate Sales Revenue is recognised when properties are sold and the buyer has taken possession of such properties. However, when there is insufficient assurance as to the receipt of the total consideration, income is accounted for on a cash received basis. Other income is recognised on an accrual basis. Net gains and losses of a revenue nature on the disposal of property, plant and equipment and other non current assets including investments have been accounted for in the income statement, having deducted from proceeds on disposal, the carrying amount of the assets and related selling expenses. Expenses are recognised in the income statement on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the property, plant & equipment in a state of efficiency has been charged to income in arriving at the profit for the year. A segment is a distinguishable component of the Company that is engaged either in providing related products or services (business segment), or in providing products and services within a particular economic environment (geographical segment), which is subject to risks and returns different from those of other business segments. For the purpose of segment reporting disclosures, the information is presented in respect of the Companys business segment which is based on the Companys management and internal reporting structure. The Company comprises the following major business segments; lending, leasing, real estates, investments and others.
a)
b)
c) d) e) f)
g) Others
2.3.16 Expenditure Recognition
2.3.17 Segmental Reporting
94

Inter-segment pricing is determined on an arms length basis. Measurement of segment assets, liabilities, segment revenue and results is based on the accounting policies set out above. Segment revenue results, assets and liabilities include items directly attributable to segments as well as those that can be allocated on a reasonable basis. Sri Lanka Accounting Standards effective from 01 January 2012 The Company will be adopting the new Sri Lanka Accounting Standards (new SLAS) comprising LKAS and SLFRS applicable for financial periods commencing from 01 January 2012 as issued by the Institute of Chartered Accountants of Sri Lanka. The Company has commenced reviewing its accounting policies and financial reporting in readiness for the transition. As the Company has a 31 March year end, priority has been given to considering the preparation of an opening balance sheet in accordance with the new SLASs as at 01 April 2012. This will form the basis of accounting for the new SLASs in the future, and is required when the Company prepares its first new SLAS compliant financial statements for the year ending 31 March 2013. Set out below are the key areas where accounting policies will change and may have an impact on the financial statements of the Company. The Company is in the process of quantifying the impact on the financial statements arising from such changes in accounting policies. SLFRS 1 First Time Adoption of Sri Lanka Accounting Standards requires the Company to prepare and present opening new SLFRS financial statements at the date of transition to new SLAS. The Company shall use the same accounting policies in its opening new SLAS financial statements and throughout all comparable periods presented in its first new SLAS financial statements. LKAS 1 Presentation of Financial Statements requires an entity to present, in a statement of changes in equity, all owner changes in equity. All non owner changes in equity are required to be presented in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). Components of comprehensive income are not permitted to be presented in the statement of changes in equity. This standard also requires the Company to disclose information that enables users of its financial statements to evaluate the entitys objectives, policies and processes for managing capital. LKAS 16 Property Plant and Equipment requires a Company to initially measure an item of property plant and equipment at cost, using the cash price equivalent at the recognition date. If payment is deferred beyond normal credit terms, the difference between the cash price equivalent and the total payment is recognized as interest over the period, unless such interest is capitalized in accordance with LKAS 23 Borrowing Costs. All site restoration costs including other environmental restoration and similar costs must be estimated and capitalized at initial recognition, in order that such costs can be depreciated over the useful life of the asset. This standard requires depreciation of assets over their useful lives, where the residual value of assets is deducted to arrive at the depreciable value. It also requires that significant components of an asset be evaluated separately for depreciation. LKAS 32 Financial Instruments: Presentation, LKAS 39 Financial Instruments: Recognition and Measurement and SLFRS 7 Disclosures will result in changes to the current method of recognizing financial assets, financial liabilities and equity instruments. These standards will require measurement of financial assets and financial liabilities at fair value at initial measurement. The subsequent measurement of financial assets classified as fair value through profit and loss and available for sale will be at fair value, with the the gains and losses routed through the statements of comprehensive income and other comprehensive income respectively. Financial assets classified as held to maturity and loans and receivables will be measured subsequently at amortized cost. These assets will need to be assessed for any objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event) coupled with a reliable estimate of the loss event (or events) impact on the estimated future cash flows of the financial asset or group of financial assets. As such the current method of assessing for impairment will have to be changed to meet the requirements of these new standards. Financial liabilities will be either classified as fair value through profit or loss or at amortized cost. At present, the Company does not identify, categorize and measure financial assets and liabilities as per the requirements of the standard and also does not recognize certain derivative instruments on the balance sheet.
2.4
(a)
(b)
(c)
(d)
95

(e) SLFRS 3 Business Combinations will require the Company to apply this standard to transactions and other events that meet the new definition of a business i.e. an integrated set of assets (inputs) and activities (processes) which are capable of being conducted and managed to provide a return, as opposed to a mere asset acquisition. Under the new acquisition method of accounting, in addition to recognizing and measuring in its financial statements the identifiable assets acquired and liabilities assumed the standard also requires recognition and measurement of any non- controlling interest in the acquiring and re-measuring to fair value any previously held interests which could have an impact on the recognition of goodwill. Subsequent to the acquisition of control any acquisitions or disposals of non-controlling interest without loss of control will be accounted for as equity transactions and cannot be recognized as profit/loss on disposal of investments in the statement of financial performance. LKAS 23 Borrowing Cost, the Company must capitalize borrowing costs in relation to a qualifying asset. [if applicable] Since the current policy is to expense all borrowing costs, this will result in a change in accounting policy. LKAS 12 Income Taxes requires deferred tax to be provided in respect of temporary differences which will arise as a result of adjustments made to comply with the new SLAS. LKAS 18 Revenue requires the Company to measure revenue at fair value of the consideration received or receivable. It also specifies recognition criteria for revenue, and the Company needs to apply such recognition criteria to the separately identifiable components of a single transaction in order to reflect the substance of the transaction. The Institute of Chartered Accountants of Sri Lanka has resolved an amendment to Sri Lanka Accounting Standard 10, whereby the provision contained in paragraphs 30 and 31 of SLAS 10 Accounting Policies, Changes in Accounting Estimates and Errors would not be applicable for financial statements prepared in respect of financial periods commencing before 1 January 2012 and hence the impact of this transition is not required to be disclosed in these financial statements.
(f) (g) (h)
96

Year ended 31 March 2012 3. INVESTMENT IN GOVERNMENT SECURITIES Government of Sri Lanka Treasury Bills - Face Value Less : Income allocated for future periods

2012 Rs.
2011 Rs.
87,453,380 (3,895,290) 83,558,090
68,224,951 (1,255,587) 66,969,364
4. PLACEMENTS WITH OTHER BANKS Fixed Deposits 365,372,426 110,559,966

365,372,426
110,559,966
5. LOANS AND ADVANCES Real Estate Loans 269,817,061 185,746,683 Short Term Loans 175,735,115 62,803,628 Long Term Loans 11,172,880 19,098,477 Personal Loans 1,678,826 21,874,471 Cash Loans 1,020,684,754 578,665,954 Consumer Credit Loans 22,478,129 17,416,943 Micro Finance Loans 2,768,280,850 1,072,356,936 Staff Loans 1,195,759 10,727,374 Rescheduled Loans 109,799,295 5,241,553 Education Loans 16,434,135 Business Loans 30,806,235 Pawning Advances 142,842,228 178,949

Less : Provision for credit losses

4,570,925,267 (21,568,947) 4,549,356,320 (17,330,935) 4,532,025,385 1,968,508,041 2,147,087,833 4,115,595,874
1,974,110,967 (20,616,227) 1,953,494,740 (9,266,019) 1,944,228,721 870,976,802 1,619,844,343 2,490,821,145
Income in suspense

6. RENTALS RECEIVABLE ON LEASE AND HIRE-PURCHASE

Lease (Note 6.a) Hire-Purchases (Note 6.b)
6.a Lease Gross rentals receivable 3,039,856,713 Less: Unearned income (970,835,214) Pre-paid rentals (32,165,260) Income in suspense (8,110,651) Provision for credit losses (60,237,547)

1,365,248,147 (370,383,573) (28,459,280) (4,067,764) (91,360,728) 870,976,802
1,968,508,041
97

Year ended 31 March 2012 2012 Rs. 2011 Rs.
6.b Hire-Purchases Gross rentals receivable Less: Unearned income Pre-paid rentals Income in suspense Provision for credit losses

3,102,088,634 (908,988,575) (1,943,058) (5,374,076) (38,695,092) 2,147,087,833
2,452,562,542 (809,734,888) (1,121,085) (1,148,819) (20,713,408) 1,619,844,343
6.1 Receivable not later than one year

Gross rentals receivable Less: Unearned income Pre-paid rentals Income in suspense Provision for credit losses
2,203,083,254 (674,588,896) (11,240,026) (4,839,096) (35,502,721) 1,476,912,515
1,549,883,249 (621,885,004) (7,223,390) (5,216,583) (54,383,849) 861,174,423
Receivable later than one year and not later than five years Gross rentals receivable 3,938,862,093 2,267,927,431 Less: Unearned income (1,205,234,893) (558,233,629) Pre-paid rentals (22,868,292) (22,356,975) Income in suspense (8,645,631) Provision for credit losses (63,429,918) (57,690,104)

2,638,683,359
1,629,646,723
7.
LEASE RENTALS RECEIVABLE AND STOCK OUT ON HIRE
7.1 Non-Performing Advances Lease & Hire Purchase Loans and Advances (Rs.) (Rs.) 2012 2011 2012 2011

Total (Rs.) 2012 2011 305,889,798 261,576,990
Amount Receivable 212,699,376 194,425,146 Less: Finance Charges Suspended (13,484,727) (5,216,583) Provision for Bad Debts (98,932,639) (112,074,136)

93,190,422 67,151,844 (17,330,935) (9,266,019) (21,568,947) (20,616,227) 54,290,540 37,269,598
(30,815,662) (14,482,601) (120,501,586) (132,690,362) 154,572,550 114,404,027
Net non-performing advances
100,282,010
77,134,428
98


2012 Rs.
2011 Rs.
7.2

Segmental Analysis of Loans and Advances, Leases, Hire Purchase by Industry Agriculture Services Trading Transport Others Distribution of Total Advances
663,459,445 1,152,147,636 68,935,750 5,534,179,238 3,294,148,545 10,712,870,614 6,141,945,347 4,570,925,267 10,712,870,614 462,498,095 668,814,278 83,566,042 3,196,109,571 1,380,933,670 5,791,921,656 3,817,810,689 1,974,110,967 5,791,921,656
Lease & Hire Purchase Receivables Loans & Advances

Total Advances
7.3 PROVISION FOR LOSSES 7.3.1 Movement in provision for Bad and Doubtful Debts Balance at the beginning of the year Charge during the year Written Off during the year

132,690,363 114,105,406 (126,294,183) 120,501,586
76,110,134 66,004,331 (9,424,102) 132,690,363
7.3.2 Provision for Bad and Doubtful Debts consist of provisioning against ; Leases and Hire Purchase Loans and Advances

98,932,639 21,568,947 120,501,586
112,074,136 20,616,227 132,690,363
8. REAL ESTATE STOCKS AND VEHICLE STOCK Real Estate Stocks 407,558,481 177,127,507 Less: Fall in Value of Real Estate Stock (41,391,832) (41,391,832)

Vehicle Stock

366,166,649 16,851,430 383,018,079
135,735,675 17,105,784 152,841,459
9.

OTHER DEBTORS, DEPOSITS & PREPAYMENTS Sundry Debtors 67,060,763 Deposits and Prepayments 88,729,182 155,789,945
15,265,209 51,838,646 67,103,855
10.

INVESMENT SECURITIES Unquoted Shares 9 (a) 201,900 5,426,900 201,900 5,426,900
99

Year ended 31 March 2012 10 (a) INVESTMENTS IN UNQUOTED SHARES Number Cost Directors Number Cost Directors of as Valuation of as Valuation Shares at as at Shares at as at 2012 2012 2012 2011 2011 2011 Rs. Rs. Rs. Rs.

Credit Information Bureau 19 1,900 1,900 19 1,900 1,900 Valible One Limited - - - 209,000 5,225,000 5,225,000 Finance House Consortium (Pvt) Ltd 20,000 200,000 200,000 20,000 200,000 200,000

Less: Fall in Value of Investment Net Investment in Unquoted shares 20,019
- 201,900
- 201,900
- 229,019
5,426,900 5,426,900
10.1 DEALING SECURITIES Number of Cost Market Value Number of Cost Market Value Shares as at as at Shares as at as at 2012 2012 2012 2011 2011 2011 Rs. Rs. Rs. Rs.

Bank Finance and Insurance Commercial Bank Of Ceylon PLC- Voting 30,192 4,155,830 DFCC Bank 7,400 1,044,266 Environmental Resources Investments PLC- Voting 100 2,400 Hatton National Bank PLC-Non Voting 20,321 4,640,902 Hatton National Bank PLC-Voting 11,155 1,278,157 Janashakthi Insurance PLC 73,400 1,258,277 National Development Bank PLC 19,600 2,984,456 Nations Trust Bank PLC 11,900 761,585 People`s Merchant PLC 20,100 498,016 Sampath Bank PLC 10,932 3,189,168 Seylan Developments PLC 10,000 192,128 Touchwood Investment PLC 1,200 28,516 Vallibel One PLC 216,100 5,402,500 LB Finance PLC 10,000 1,406,680 The Finance Company PLC - Voting 648 9,000 Peoples Leasing Company PLC 13,100 160,983 Seylan Bank PLC 10,000 324,595 Vanik Incorporation PLC - - First Capital Holding PLC - - 466,148
3,019,200 833,240 1,680 3,109,114 1,054,148 851,440 2,406,880 677,110 259,290 1,965,574 79,000 18,600 4,105,900 1,349,000 19,505 151,960 290,000 - -
15,000 4,155,830 3,987,000 - - - - 214 6,786 45,646 770 25,145 292,600 - - - - - - 100 625 2,500 10,341 2,996,460 3,080,774 - - - - - - - - 648 9,000 23,976 - - - - 218 108 20,000 445,726 442,000 47,291 7,639,680 7,874,496
27,337,459 20,191,640
100

10.1 DEALING SECURITIES (Contd.) Number of Cost Market Value Number of Cost Market Value Shares as at as at Shares as at as at 2012 2012 2012 2011 2011 2011 Rs. Rs. Rs. Rs.

Diversified Holdings Hayleys PLC Hemas Holdings PLC Richard Pieris And Company PLC Brown & Company PLC
10,000 10,000 40,000 1,000 61,000
3,690,880 415,603 485,376 322,431 4,914,290
3,600,000 263,000 300,000 155,100 4,318,100
10,000 - - - 10,000
3,690,880 3,821,000 - - - 3,690,880 3,821,000
Invesment and Trust Shaw Wallace & Hedges PLC 3,200 843,846 656,000

- -
- -
3,200
843,846
656,000
Construction and Engineering Colombo Dockyard PLC 1,300 326,668 299,000 1,300 2,578,560 1,950,000 Diesel & Motor Engineering PLC 3,460 6,016,640 3,398,412 3,060 5,612,160 4,454,220 Mtd Walkers PLC 34,400 2,690,803 791,200 30,000 1,600,000 1,632,640

39,160
9,034,111
4,488,612
34,360
9,790,720 8,036,860
Plantations Kegalle Plantations PLC 5,000 1,077,737 515,000

- - - -
5,000
1,077,737
515,000
Beverage Food and Tobacco Lanka Milk Foods (CWE) PLC 10,000 1,210,679 978,000 - The Lion Brewery Ceylon PLC 2,700 524,206 538,650 2,700 Distilleries Company of Sri Lanka PLC 10,000 1,719,040 1,450,000 10,000 Ceylon Cold Stores PLC 100 9,505 9,000 - 22,800 3,463,430 2,975,650 12,700

- 524,206 540,000 1,719,040 1,800,000 - 2,243,246 2,340,000
101

10.1 DEALING SECURITIES (Contd.) Number of Cost Market Value Number of Cost Market Value Shares as at as at Shares as at as at 2012 2012 2012 2011 2011 2011 Rs. Rs. Rs. Rs.

Hotels and Travels Serendib Hotels PLC-Non Voting 50,000 682,560 785,000 John Keells Hotels PLC 50,000 970,752 630,000 Marawila Resorts PLC 10,000 142,579 70,000 Hotel Services (Ceylon) PLC 5,000 93,536 87,000 Kalpitiya Beach Resort PLC 40,700 467,255 366,300 Waskaduwa Beach Resort PLC 3,000 30,943 28,500 Dolphin Hotels PLC 12,100 382,436 363,000 Hotel Sigiriya PLC 10,000 712,812 716,000 Renuka City Hotel PLC 1,000 201,229 218,900 Sigiriya Villiage Hotels PLC 4,000 303,006 296,000 185,800 3,987,108 3,560,700
_ 50,000 - - - - - - - - 50,000
_ _ 970,758 860,000 - - - - - - - 970,758 860,000
Chemicals and Phamaceuticals Lankem Ceylon PLC - - - 5,000 - - - 5,000
2,291,470 2,007,500 2,291,470 2,007,500
Land and Property Overseas Realty (Ceylon) PLC 89,600 1,352,986 1,200,640 Kelsey Homes PLC 800 11,811 11,360 90,400 1,364,797 1,212,000
- - -
- -
Manufacturing Royal Ceramics Lanka PLC 5,000 798,848 575,000 - - Textured Jersey Lanka PLC 130,100 1,951,500 936,720 - Piramal Glass Ceylon PLC 10,000 60,672 61,000 - - Haleys MGT Knitting Mills PLC 500 6,421 5,950

145,600
2,817,441
1,578,670
- - -
- -
Power and Energy Panasian Power PLC 77,600 407,514 201,760 77,600 407,514 201,760 Net Investment Securities in quoted shares 55,247,733 39,698,132
159,351 26,626,754 24,939,856
Less : Fall in value of investment (15,549,602) (1,686,898)

Net Investment in Quoted shares 39,698,129 24,939,856
102

Year ended 31 March 2012 11. PROPERTY, PLANT AND EQUIPMENT 11.1 Gross Carrying Amounts Balance Balance as at Additions/ Disposals/ as at Cost 01.04.2011 Transfers Transfers 31.03.2012 Freehold Assets Rs. Rs. Rs. Rs.

Land - 3,751,000 - 3,751,000 Building - 928,000 - 928,000 Furniture and Fittings 47,758,939 24,039,174 19,500 71,778,613 Equipment 6,218,595 15,112,281 - 21,330,876 Motor Vehicles and Accessories 65,012 3,385,385 - 3,450,397 Computer Hardware 30,006,250 38,284,211 - 68,290,461 Air Conditioning 7,791,753 4,785,152 - 12,576,905 Generators 1,734,926 - - 1,734,926

93,575,475 90,285,203 19,500 At Valuation Land 115,000,000 - - Building 40,500,000 - -

183,841,178
115,000,000 40,500,000 155,500,000
155,500,000 - - Assets on Finance Lease Equipment 3,560,989 - - Motor Vehicle 16,336,913 - 16,336,913 Computer Hardware 13,584,559 - 3,633,099

3,560,989 9,951,460 13,512,449 352,853,627
33,482,461 282,557,936
- 90,285,203
19,970,012 19,989,512
Total Value of Depreciable Assets
103

11. PROPERTY, PLANT AND EQUIPMENT (Contd.) Balance Charge as at for the 11.2 Depreciation 01.04.2011 Period Transfers Disposals Rs. Rs. Rs. Rs.

Balance as at 31.03.2012 Rs. 10,933 14,319,710 3,973,449 3,450,385 25,015,668 4,645,108 1,579,333 52,994,586
Freehold Assets Building - 10,933 - - Furniture and Fittings 6,804,146 7,527,107 - 11,543 Equipment 1,839,450 2,133,999 - - Motor Vehicles and Accessories 44,434 20,553 3,385,398 - Computer Hardware 15,944,250 9,071,418 - - Air Conditioning 2,695,652 1,949,456 - - Generators 1,048,854 530,479 - -
28,376,786 21,243,945 3,385,398 11,543 At Valuation Building - 861,702 - -

861,702 861,702
- 861,702 Assets on Finance Lease Equipment 441,625 449,674 - - Motor Vehicle 11,096,880 1,071,161 3,385,398 8,782,643 Computer Hardware 4,110,802 3,490,436 - -

891,299 7,601,238 8,492,537 62,348,825
15,649,307 44,026,093
5,011,271 27,116,918
3,385,398 6,770,796
8,782,643 8,794,186
104

Year ended 31 March 2012 11. PROPERTY, PLANT AND EQUIPMENT (Contd.) 11.3 Net Book Value 2012 2011 Rs. Rs.

At Cost Land Building Furniture and Fittings Equipment Motor Vehicles and Accessories Computer Hardware Air Conditioning Generators
3,751,000 917,067 57,458,903 17,357,427 12 43,274,793 7,931,797 155,593 130,846,592
40,954,793 4,379,145 20,578 14,062,000 5,096,101 686,072 65,198,689
At Valuation Land Building
115,000,000 39,638,298 154,638,298
115,000,000 40,500,000 155,500,000
On Finance Leases Equipment Computer Hardware Motor Vehicle
2,669,690 2,350,222 - 5,019,912 290,504,802
3,119,364 9,473,757 5,240,033 17,833,154 238,531,843
Total Net Book Value
11.4 During the financial year, the Company acquired Property, Plant and Equipment to the aggregate value of Rs.83,266,727/- (2011 Rs.42,913,517/-) . Cash payments amounting to Rs. 83,266,727/- ( 2011 - Rs.35,143,813/-) was paid during the year for purchases of Property , Plant and Equipment . 11.5 Property, Plant and Equipment includes fully depreciated assets having a gross carrying amount of Rs.31,442,773/- ( 2011Rs.31,750,035/) .
105

11.6
The useful life/ depreciation method of depreciable assets were reviewed and changed by the Company. Due to these changes in estimation, the following additional charges have resulted in the current period financial statements as indicated below.
Increase in depreciation Charge based on revised estimate Year ended 31.03.2012 Rs.

Depreciation Charge based on previous estimate Year ended 31.03.2012 Rs. 12,736,077
Property, Plant and Equipment 22,308,138

12. LEASEHOLD PROPERTY 2012 Rs.

2011 Rs. 9,207,644 (160,605) 9,047,039
Balance at the beginning of the year 9,047,039 Amortisation for the year (122,217)

Balance at the end of the year
8,924,822
13. INVESTMENT PROPERTY 2012 Rs.

2011 Rs. 22,000,000 4,000,000 26,000,000
At the beginning of the year 26,000,000 Purchase of Investment Property 63,571,140 Net gain from fair value adjustment 110,428,860

At the end of the year
200,000,000
Valuation Details of Investment Property The Investment property at Rassandeniya, Mathara was revalued as at 31st March 2012 by Messrs. Sunil Fernando & Associates (Pvt) Ltd- Chartered Valuation Surveyors, An Independent valuer with recent experience in valuing properties of similar location and category. The Investment Property was valued at their open market/fair value, and the surplus arising from the revaluation was transfered to the Income Statement.
106

Year ended 31 March 2012 14. DEPOSITS FROM CUSTOMERS

2012 Rs. 2,027,398,422 4,213,157,265 515,157,841 6,755,713,528
2011 Rs. 1,303,272,819 2,359,001,688 178,217,782 3,840,492,289
Fixed Deposits-Monthly Fixed Deposits-Maturity Savers Deposits

15. BORROWINGS

2012 Rs. 968,697,640 542,184,002 6,838,916 1,517,720,558
2011 Rs. 376,421,883 206,434,236 12,129,603 594,985,722
Bank Loans (15.1) Bank Overdrafts Finance Lease (15.3)

107
108
As at 01.04.2011 Rs. 79,336,000 150,000,000 - 30,000,000 120,000,000 60 Months - 16,992,000 62,344,000 60 Months Loans Repayments Obtained Rs. Rs. As at 31.03.2012 Rs. Terms of the Loan Security Offered Securitisation of Lease receivable with a retained margin of 40% Mortgage over lease receivables of lease contracts with a total receivable value of Rs.250 M together with the underlying assets and a special power of attorney in favor of the Bank. - 48 Months Mortgage bond No.3666 for Rs.1.0 Mn and leeway available on existing territory floating mortgage bond no. 4573 for Rs.5.0 Mn 74,823,250 48 Months Primary Mortgage Bond 17.5 Mn,Secondary Mortgage Bond Rs.3.75Mn,Tertiary Mortgage Bond Rs.8.25Mn and Quaternary Mortgage Bond over property situated at 106, Yatinuwara Veediya, Kandy & Registered Mortgage Bond-2006/01 dated 05/10/2006 over lease/ hire purchase contracts for Rs.25 M. - 928,800 2,475,200 45 Months Primary Registered Mortgaged Bond for Rs.6.5 Mn. over the property situated in Main street Hingurakgoda. - - - 40,000,000 14,865,572 18,750,000 3,333,336 5,674,711 54,687,500 36,666,664 24 Months Lease Rentals receivables 24 Months 36 Months Lease & HP receivables for Rs.125 Mn Primary Mortgage over divided and defined allotment of the land market lots situated at Pinnaduwa and Ankokkawlal in Akmeemana. 1,603,550 - 1,603,550 48,100,550 45,500,000 18,777,300 3,404,000 20,540,283 73,437,500
15.1 Bank Loans
HNB Securitization Loan - 02
Capital Loan - HNB
Commercial Bank Revolving Loan
Term Loan Commercial Bank - HG
Ceyleases Financial Services Loan
Sampath Bank Securitisation Loan - 01
DFCC Term Loan

As at 01.04.2011 Rs. - 100,000,000 1,484,701 98,515,299 48 Months Loans Repayments Obtained Rs. Rs. As at 31.03.2012 Rs. Terms of the Loan Security Offered
Year ended 31 March 2012 15.1 Bank Loans
Project Loan Merchant Bank of Sri Lanka
Primary mortgage over the property called Nugagahahenewatta situated at Rassandeniya in Matara with the total etend of 10Acre, 01 Rood ,8.7 perches and the property called Peligalahena situated at Akurutgoda in Matara with the extend of 3Acre , 5.63 Perches and the property called Ketapolamukalana situated at Kahatapitiya in Batapola with the extend of 05 Acre, 2Rood & 27.7 Perches. 36 Months Lease & HP receivables for Rs.88.5 Mn 36 Months Lease & HP receivables for Rs.173.4 Mn
Peoples Leasing Company Loan 2 - - 40,000,000 - 100,000,000 15,694,760
50,000,000
4,023,424
45,976,576 84,305,240 40,000,000
Peoples Leasing Company
Pan Asia Bank-Term Loan
24 Months
All that allotment of Land marked Lot 1 Depicted in Pan No.11325 dated 03.08.2011 made by H.M.A.R.B. Herath (Lc) of the Land called Siyamalagahawatta situated at Dematapitiya in Puttlam District in extent of A4-R0P00,A4-R2-P20A4-R2-P00 1,770,800 - 83,229,200 215,000,000 36 Months 48 Months Mortgage over the hire purchasec contracts with a safety margin of 40% Mortgage over the lease receivables with a safety margin of 40% and special power of attorney in favor of the Bank.
HNB Securitization Loan - 04 -
85,000,000 215,000,000
Union Bank Securitization Loan - 01
45,000,000
45,000,000
48 Months
Primary Floating Mortgage Bond for LKR 45 Mn over current Lease/ Hire Purchase receivables having a minimum total value of Rs 60Mn. 376,421,883 720,500,000 128,224,243 968,697,640
109

Year ended 31 March 2012 15. BORROWINGS (Contd.) 15.3 Finance Leases

As at 01.04.2011 Rs. 12,129,603 12,129,603
New Leases Obtained Rs. - -
Repayments Rs. 5,290,687 5,290,687
As at 31.03.2012 Rs. 6,838,916 6,838,916 7,864,574 (1,025,658) 6,838,916
Finance Leases

Gross Liability Finance Charges allocated for future periods

14,687,530 (2,557,927) 12,129,603
Net Liability
15.4 Refer note 29.1 for the Gross Liability and Finance charges allocated for the future period on maturity basis. 2012 Rs.

2011 Rs.
16.

CASH AND CASH EQUIVALENTS IN THE CASH FLOW STATEMENT Cash and Bank Balances 140,960,720 Reverse Repurchase Agreements ( less than 3 months) 163,173,162 304,133,882 (542,184,002) (238,050,120)
203,708,480 10,000,000 213,708,480 (206,434,236) 7,274,244
Bank Overdrafts

Total Cash and Cash Equivalents for the Purpose of Cash Flow Statements
17. OTHER LIABILITIES Accrued Interest 171,304,567 Accrued Expenses and Other Payables 456,021,542 Advances received against Real Estate Stocks 51,768,478

120,167,581 269,130,259 37,639,420 426,937,260
679,094,587
18. EMPLOYMENT BENEFIT LIABILITY Employment Benefit Obligations - Gratuity Balance at the beginning of the year Amount Charged for the year (18.1) Payments made during the year

13,489,412 7,543,522 (3,189,600) 17,843,334
9,889,650 4,439,162 (839,400) 13,489,412
Balance at the end of the year
An actuarial valuation of the gratuity was carried out as at 31 March 2012 by Piyal S Goonetilleke and Associates, a firm of professional actuaries. The valuation method used by the actuary is Projected Unit Credit Method, recommended by SLAS No.16. The present value of defined benefit obligation as at 31 March 2012 is Rs.20,673,324 /-. 18.1

Expenses on Employment Benefit Plan Current Service Cost for the year 4,899,686 2,517,784 Interest cost for the year 2,216,874 1,792,539 Actuarial Loss Recognised during the Year 426,962 128,839 7,543,522 4,439,162
110

Year ended 31 March 2012 18.2 Actuarial assumptions 2012 2011

Discount Rate 12% 12% Salary scale 11% 11% Staff Turnover 20 years 10% 10% 25 years 10% 10% 30 years 10% 10% 35 years 7.5% 10% 40 years 5% 5% 45 years 2.5% 3% 50 years 1% 1% Mortality - GA 1983 Mortality Table Retirement age - Normal retirement Age , or Age on valuation date , if greater. 19. STATED CAPITAL 2012 2011 Number Rs. Number Rs.

19.1 Fully paid ordinary shares

218,074,365
170,640,315
218,074,365
170,640,315
20. RESERVES

General Reserve Rs. 58,751,125 -
Revaluation Reserve Rs. 122,799,764 - 122,799,764
Reserve Fund Rs. 73,013,637 - 73,013,637
Investment Fund Reserve Rs. 8,318,520 - 8,318,520 55,551,354 63,869,874
Retained Profits Rs.
Total Rs.
At the beginning of the year Profit for the year

(1,386,127) 261,496,919 758,286,560 758,286,560 756,900,432 1,019,783,478 (207,551,354) -
58,751,125 Transfers to/(from) during the year -

- 152,000,000 122,799,764 225,013,637
At the end of the year
58,751,125
549,349,078 1,019,783,478
20.1 20.2 General Reserve represents the amounts set aside by the Directors for general application. Reserve Fund is a capital reserve which contains profits transferred as required by Section 3(b)(ii) of Central Bank Direction No. 1 of 2003. The Investment Fund Reserve is created in accordance with the Central Bank guidelines issued to create an Investment Fund Reserve 8% of the profits liable for VAT on Financial Services is transferred to this reserve monthly when the payment of VAT on Financial Services for such month becomes due. In accordance with the guidelines issued, the company maintains government securities equivalent to the value of the reserve. These government securities are included in the treasury bills value presented on balance sheet.
20.3
111

Year ended 31 March 2012 21. INCOME

2012 Rs.
2011 Rs.
21.1 Summary Gross Income (21.2)

2,765,858,538 2,765,858,538
1,254,391,240 1,254,391,240
21.2

Segmental Analysis of Gross Income Interest 2,470,103,551 1,112,597,093 Real Estate 126,557,260 71,883,738 Fees & Commission Income 112,763,479 55,141,424 Others 56,434,248 14,768,985 2,765,858,538 1,254,391,240
22.

INCOME FROM INTEREST BEARING ACTIVITIES Interest on Leases 396,044,739 Interest on Loans 1,415,418,300 Interest on Hire Purchase 578,286,092 Interest on Land Finance 43,865,778 Interest on Treasury Bills 14,159,810 Interest on Bank Deposits 22,328,832 2,470,103,551
271,723,707 451,117,891 354,996,315 20,425,013 12,198,093 2,136,074 1,112,597,093
23. INTEREST EXPENSES Interest on Fixed Deposits- Maturity 379,979,115 255,477,932 Interest on Fixed Deposits- Term 199,142,328 124,667,398 Interest on Savers Deposits 20,327,088 4,185,163 Interest on Loans 67,763,304 14,835,017 Interest on Bank Overdrafts 30,364,799 7,979,776 Interest on Finance Leases 1,528,929 2,964,157

699,105,563
410,109,443
24. OTHER OPERATING INCOME Profit on Sale of Dealing Securities 2,009,056 Profit on Sale of Fixed Assets 6,898,076 Real Estate Income ( net of cost ) 34,960,481 Service Charges 48,907,325 Documentation Charges 52,584,440 Commission Income 11,271,714 Recoveries of Bad Debts on write offs 4,946,464 Sundry Income 4,833,391 Profit on Repossessed Items 2,786,780

345,877 3,946,176 6,363,556 31,288,702 18,200,975 5,651,747 2,646,667 611,055 855,655 69,910,410
169,197,727
112

Year ended 31 March 2012 25. PROVISION FOR FALL IN VALUE OF INVESTMENTS, BAD AND DOUBTFUL LOANS 2012 2011 Rs. Rs.

Fall in value of Investment Bad and Doubtful Loans
13,862,704 114,105,406 127,968,110
3,044,307 66,004,331 69,048,638 2011 Rs. 11,499,812 4,439,162 20,345,701
26. PROFIT FROM OPERATION STATED AFTER CHARGING THE FOLLOWING EXPENSES Depreciation Employee benefits including following: Defined benefit plan cost - Gratuity Defined contribution plan cost - EPF & ETF
2012 Rs. 27,116,931 7,543,522 35,936,126
27. INCOME TAX EXPENSE The major components of income tax expense for the years ended 31 March are as follows : Income Statement Current Income Tax Current Income Tax charge 203,866,206 55,519,585 Deferred Income Tax Deferred Taxation Charge (27.2) 122,393,410 128,752,323

Income tax expense reported in the Income Statement
326,259,616
184,271,908
27.1
A reconciliation between tax expense and the product of accounting profit multiplied by the statutory tax rate is as follows : Accounting Profit before Income Tax 1,084,546,176 244,366,294 Income Tax Expense at the statutory income tax rate of 28% Non deductable expenses 250,847,570 330,400,200 Tax Effect of Other Allowable Credits (544,087,159) (372,134,047) 791,306,587 769,333 (63,982,328) 728,093,592 203,866,206 - 203,866,206 28% 202,632,447 37,803,150 (84,152,459) 156,283,138 54,699,098 820,486 55,519,585 36%
Profit on Leasing Business Claim of Tax Loss

Income Tax @ 28% Social Security Levy at 1.5% of Tax Income Tax Expense at the effective income tax rate of 28% The Companys operations were taxed at the rate of 28% during the year
113

Year ended 31 March 2012 27.2 Deferred Tax Assets , Liabilities and Income Tax relates to the followings Balance sheet Income Statement 2012 2011 2012 2011 Rs. Rs. Rs. Rs.

Deferred Tax Liability Capital allowances for tax purposes 152,611,683 25,334,623 127,277,060 84,402,658 Revaluation of Buildings 1,696,011 1,696,011 - Effect of rate change - - - (8,453,669)

154,307,694
27,030,634
127,277,060
75,948,989
Deferred Tax Assets Defined Benefit Plans 4,996,134 3,777,035 (1,219,099) 1,259,917 Tax Loss 17,915,051 14,250,500 (3,664,551) 49,556,365 Effect of rate change - - - 1,987,052

22,911,185
18,027,535
(4,883,650) 122,393,410
52,803,334 128,752,323
Deferred tax Expense Net Deferred Tax Liability 131,396,509 9,003,099
28. EARNING PER SHARE 28.1 Basic Earnings Per Share is calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. 28.2 The following reflects the Income & Share data used in the Basic Earnings Per Share computation . 2012 2011 Amounts Used as the Numerators: Rs. Rs.

Net Profit Attributable to Ordinary Shareholders for Basic Earnings Per Share
758,286,560
60,094,385
2012 2011 Number of Ordinary Shares Used as Denominators for Basic Earnings per share Number Number Weighted Average number of Ordinary Shares in issue 218,074,365 218,074,365 Applicable to Basic Earnings Per Share 3.48 0.28

114

Year ended 31 March 2012 29. MATURITY ANALYSIS An analysis of the total assets employed and total liabilities at the year end , based on the remaining at the balance sheet date to the respective contractual maturity dates are given below. Less than 3 3-12 1-3 over 3 Total Total months months years years 2012 2011 Rs. Rs. Rs. Rs. Rs.

Assets Cash in hand and at Banks 140,960,720 - - - 140,960,720 203,708,480 Treasury Bills 46,792,530 36,7,5,560 - - 83,558,090 66,969,364 Reverse Repurchase 163,173,162 - - - 163,173,162 10,000.00 Agreements Deposits with Banks 204,608,559 160,763,867 - - 365,372,426 110,559,966 Loans and Advances 1,088,307,690 1,677,512,241 1,405,483,229 360,722,225 4,532,025,385 1,944,228,721 Lease Rental Receivable and stock out on hire 1,103,176,685 1,466,572,500 1,228,749,932 317,096,757 4,115,595,874 2,490,821,145 Real State & Vehicle Stock - - - 383,018,079 383,018,079 152,841,459 Other Debtors, Deposits & Prepayment 145,887,387 9,902,558 155,789,945 67,103,854 Investment Portfolio - - - 201,900 201,900 5,426,900 Dealing Securities 39,698,127 - - - 39,698,127 24,939,856 Property, Plant & Equipment 290,504,802 290,504,802 238,531,845 Leasehold Property - - - 8,924,822 8,924,822 9,047,039 Investment Property - - - 200,000,000 200,000,000 26,000,000

As at 31.03.2012
2,932,604,860
3,351,516,726
2,634,233,161 1,560,468,585 10,478,823,332 5,350,178,629
Liabilities Deposits from Customers - FD/FSD 2,935,816,954 Borrowings 618,005,787 Finance Leases (Note:29.1) 905,433 Other Liabilities 585,219,310 Tax Payable 186,631,022 Provision for Gratuity - Deferred tax Liability -

3,378,582,213 218,182,655 2,627,000 83,034,866 - - - 3,682,426,734
339,605,523 518,484,202 3,306,483 8,346,430 - - - 869,742,638
101,708,838 6,755,713,528 3,840,492,289 156,208,999 1,510,881,643 582,856,119 - 6,838,916 12,129,603 2,493,981 679,094,587 426,937,260 - 186,631,022 33,133,610 17,843,334 17,843,334 13,489,412 131,396,509 131,396,509 9,003,099 409,651,661 9,288,399,539 4,918,041,392
As at 31.03.2012
4,326,578,506
115

Year ended 31 March 2012 29.1 Finance Leases

Less than 3 months Rs. 1,148,940 (243,507) 905,433
3-12 months Rs. 3,159,153 (532,153) 2,627,000
1-3 years Rs. 3,556,481 (249,998) 3,306,483
over 3 years Rs. - - -
Total 2012 Rs. 7,864,574 (1,025,658) 6,838,916
Financial Leases - Gross Liability Less: Finance Charges allocated for Future Periods
30. COMMITMENTS AND CONTINGENCIES 30.1 Contingent Liabilities There are no contingent liabilities as at the balance sheet date. 30.2 Commitments The Company has purchase commitments for acquisition of Property, Plant and Equipment & Vehicle Stocks incidental to the ordinary course of business are , 2012 2011 Rs. Rs. Contracted but not provided for 11,813,579 11,955,027

11,813,579
11,955,027
31.
ASSETS PLEDGED The following assets have been pledged as security for liabilities. Nature of assets Nature of Liability Carrying Amount Pledged 2012 2011 Rs. Rs. 1,038,816,365 502,940,022
Included Under
Lease Receivables & Stock out on hire Loans Lease Rentals Receivables & Stock out on hire Property, Plant and Equipment , Investment Properties and Real Estate Stock.
Freehold Land & Building
Loans & Overdrafts
336,958,866
111,258,866
1,375,775,231
614,198,888
116
32. FINANCIAL REPORTING BY SEGMENT Finance Lease 2012 2011 Rs. Rs. Hire Purchase 2012 2011 Rs. Rs.
578,286,092 354,996,315 1,415,418,300 25,531,199 730,925,897 364,135,629 1,354,636,474 254,959,545 83,281,770 624,041,303 151,447,375 75,137,516 22,824,561 15,407,190 482,757,433 201,714,919 101,048,779 41,452,657 9,139,314 62,490,394 31,639,542 7,524,138 8,740,027 - 451,117,891 170,423,038 92,308,752 36,488,642
Term Loan 2012 2011 Rs. Rs.
Real Estate 2012 2011 Rs. Rs.
Short Term Investment 2012 2011 Rs. Rs.
Unallocated 2012 2011 Rs. Rs.
2012 Rs.
Total 2011 Rs.
396,044,739 17,217,748 413,262,487 174,498,507 14,998,877 285,191,348 13,467,641 271,723,707 14,334,167 2,596,660,811 1,184,480,832 714,907 56,434,248 10,208,978 112,763,479 56,434,248 23,829,146 6,847,231 1,167,873,207 (83,327,031) 63,701,431 10,208,978 281,910,023 (37,543,728) 244,366,295 758,286,560 60,094,387
Interest
Fee Based Income & others
Unallocated Revenue 2,510,209
Total Revenue
15,049,074 140,769,421 10,208,978 2,765,858,538 1,258,391,241
Segmental Result
VAT on Financial Institutions
Profits from Operations 1,084,546,176
Income Tax Expenses (326,259,616) (184,271,908)
1,968,508,041
Net profit for the period
870,976,802 2,147,087,833 1,619,844,343 4,262,208,324 1,758,482,039 652,835,140 321,482,357 448,930,516 217,896,087 999,253,478 561,497,000 10,478,823,332 5,350,178,628
Segment Asset
10,478,823,332 5,350,178,628 1,744,879,993 800,627,468 1,903,172,618 1,489,008,514 3,778,009,474 1,616,448,358 578,671,233 295,516,029 397,930,747 200,296,485 885,735,473 516,144,538 9,288,399,538 4,918,041,392
Segment Liabilities
Total Liabilities 9,288,399,538 4,918,041,392
117

33.
EVENTS OCCURRING AFTER THE BALANCE SHEET DATE There have been no material events occurring after the balance sheet date that require adjustments to or disclose in the Financial Statement.
34. RELATED PARTY DISCLOSURES 34.1 Transactions with Key Managerial persons The Key Managerial personnel of the Company are the members of its Board of Directors and Corporate Management. Following transactions are entered between the company and its Key Management Personnel and their close family members. 34.1.1 Compensation to Key Managerial Personnel 2012 2011 Rs. Rs.

Short Term Employment Benefits Paid 37,796,340 23,945,677 Post employment Benefits 3,899,759 3,720,850 34.1.2 Other transactions with Key Managerial Personnel Fixed Deposits Accepted during the year 10,650,000 8,632,000 Fixed Deposits held at the end of the year 10,410,871 9,156,848 Interest paid on Fixed Deposits 247,110 1,432,453 Loans granted during the year 7,300,000 Interest received on loans granted 144,435 35. COMPARATIVE INFORMATION The presentation and classification of the following items in the financial statements are amended to ensure the comparability with the current year. 2012 2011 Current As reported Presentation Previously Rs. Rs.

Treasury Bills Reverse Repurchase Agreements
66,969,364 10,000,000 76,969,364
76,969,364 76,969,364
Reason for changes in the presentation and classification:
Reverse repurchase agreements were recorded under the treasury bills in previous year accounts, was reclassified as Reverse repurchase agreements for a better presentation of these Financial Statements.
118
New Accounting Standards Issued but not Effective as at Balance Sheet Date
The new/revised accounting standards issued by the Institute of Chartered Accountants, Sri Lanka become applicable for financial statements covering periods beginning on or after 1st January 2012. Commercial Credit and Finance PLC has estimated the impact resulting from two of the new accounting standards namely LKAS 32 (Financial Instruments: Presentation) and LKAS 39 (Financial Instruments: Recognition and Measurement). Accordingly a statement setting out the impact to the statement of comprehensive income and the net asset base of the Company are given below. The figures in this statement are subject to audit and are given as indicative information only.
Impact to the Statement of Comprehensive Income and Net Asset based on SLFRS/LKAS The Commercial Credit and Finance PLC has estimated the impact on LKAS 32 and 39 on best effort basis and this is subject to external audit. The Impact on other standards are insignificant and hence not disclosed. Statement of Comprehensive income for the period ended 31st March 2012 Area Nature of SLFRS/LKAS adjustment Statement of Income Statement of Other Comprehensive Income
Net Assets as at 31st March 2012
Net Assets as at 31st March 2011
Increased/(Decreased) by Impairment of financial assets, loans & advances, lease receivables and hire purchase receivables General and specific provision based on CBSL requirements will be replaced by collective and specific impairment. All individually significant loans were separately tested and others were collectively tested. Initially, staff loans are recognised at market rate and subsequently interest is recognised at Effective Interest Rate (EIR). Investments can be classified as fair value through P & L (FVTPL) or Available for sale (AFS) where at each reporting period investments should be fair valued. Fair value gains and losses of FVTPL should be recognised in the Income Statement. FV gains and losses of AFS investments should be recognised as other comprehensive income. Investments classified as Held to maturity (HTM) should be subsequently measured at amortised cost. Interest income on longer maturity investments is recognised at EIR Interest expense on longer maturity deposits is recognised at EIR. No significant impact
1.
Decrease by Rs. 13.7 million
No Impact
Decrease by Rs. 1.7 million
Increase by Rs. 12 million
2.
Measurement of staff loans at fair value Measurement of investments at fair value Available for Sale (AFS)
No significant impact No significant impact No significant impact
No significant impact
3. Fair Value through P & L (FVTPL)
4.
Measurement of Investments at Effective Interest Rate (EIR) Measurement of deposits at Effective Interest Rate (EIR)
No significant impact Decrease by Rs. 1.1 million
No significant impact Increase by Rs. 1.1 million
No significant impact Increase by Rs. 2.2 million
5.
No Impact
119
Investor Information
1.

Stock Exchange Listing

The Ordinary Shares of the Company are listed on the Colombo Stock Exchange since 1st June 2011 and the Stock Exchange ticker symbol for Commercial Credit and Finance PLC is COCR The audited Income Statement for the year ended 31st March 2012 and the audited Balance Sheet of the Company have been submitted to the Colombo Stock Exchange before 30th June 2012.
2.

Shareholder Base
The Total number of (Ordinary Voting) shareholders as at 31st March, 2012 were 1,558 compared to 214 shareholders as at 31st March, 2011.
3.
Distribution of Shareholders
As at 31st March 2012 No. of Shareholders 760 441 116 151 42 36 12 No. of Shares 377,352 1,234,165 919,546 3,666,764 3,044,193 7,585,452 201,246,893 % of Shareholdings 0.17 0.57 0.42 1.68 1.40 3.48 92.28 As at 31st March 2011 No. of Shareholders 0 48 28 57 34 34 13 No. of Shares 0 123,975 204,390 1,282,245 2,477,535 7,751,280 206,234,940 % of Shareholdings 0.00 0.06 0.09 0.59 1.14 3.55 94.57
Range of Shareholders

1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 50,000 50,001 - 100,000 100,001 - 500,000 500,001 & above Total
1,558 218,074,365 100.00
214 218,074,365 100.00
4.

Composition of Shareholders
Ordinary Voting Shares Resident Total Individual Total

As at 31st March 2011 No. of No. of % of Sharehol Shareholders Shares Shareholdings 214 - 214 211 3 214 218,074,365 - 218,074,365 47,187,825 170,886,540 218,074,365 100 100 21.64 78.36 100
As at 31st March 2012 No. of No. of % of Shareholders Shares Shareholdings 1,547 11 1,558 1,523 35 1,558 217,955,665 118,700 218,074,365 45,582,628 172,491,737 218,074,365 99.95 0.05 100.00 21.00 79.00 100.00
Non-Resident
Institutional
As per Rule No. 17.6 (iv) of the Colombo Stock Exchange, percentage of public holding as at 31st March, 2012 was approximately 19.98%.
120
5.
Top Twenty Shareholders

Name Number of Shares 166,443,654 15,484,365 7,427,520 3,384,245 1,997,249 1,902,685 1,425,000 1,124,490 808,580 715,755 533,350 420,000 413,600 405,640 395,900 393,810 339,300 327,000 301,700 275,020 204,518,863 13,555,502 218,074,365 Ordinary Voting Shares As at 31st March 2012 % 76.32 7.10 3.41 1.55 0.92 0.87 0.65 0.37 0.33 0.24 0.19 0.19 0.18 0.15 As at 31st March 2011 Number of Shares 168,103,980 15,494,265 7,427,520 3,424,260 2,388,750 2,116,485 1,425,000 1,162,980 814,455 1,148,550 879,885 724,320 393,810 327,000 % 77.09 7.11 3.41 1.57 1.10 0.97 0.65 0.53 0.37 0.53 0.40 0.33 0.18 0.15
M/s B G Investments (Pvt) Ltd Mrs Vagdevi Wimalangi Fernando Mr George Ginendra Hemachandra Ms Deegal Nilanthi Keerthisinghe Pedrisons Limited Mr Sri Deva Kumara Semage Mr Thusitha Kumara Hemachandra Mrs Samudra Nirmala Hemachandra Mr Deegala Jayantha Keerthisinghe Mrs Lakshmie Susila Semage Dr. (Mrs) Erasha Fernando Mr Premakumar Shanthlal Maryson Fernando DPMC Assetline Holdings (Pvt) Ltd. Mr Karandeniya Hewage Ukkantha Garvin Fernando Rosewood (Pvt) Ltd. - Account No.1 M/s Isuru Finance Co. Ltd. M/s Alliance Finance Company PLC Mr Minugoda Hewage Gunawardena Mrs Hewage Harshani Jeewanthika Mr Danesh Tharaka Semage SUB TOTAL Others TOTAL
0.52
0.19 0.18 0.16 0.14 0.13 93.79 6.21 100 205,831,260 12,243,105 218,074,365 94.39 5.61 100
6.
Directors Shareholding
As at 31st March 2012 As at 31st March 2011 % of Holding 3.41 No. of % of No. of Shares Holding Shares 7,427,520 98,438 3.41 0.04 7,427,520 Nil
Mr G G Hemachandra Mr I G S K Gunaratne
Dr. (Mrs) E Fernando 533,350 0.24 Not Not Applicable Applicable

121
7.
Share Information
Net Assets per Share (Rs.) 2012 2011 0.55 0.20
Share Prices Highest (Rs.) Lowest (Rs.) Last Traded (Rs.) 24.50 12.20 16.00 Not Applicable Not Applicable Not Applicable
Earnings Basic Earnings per Share (Rs.) Price Earnings Ratio (Times) Market Capitalisation (Rs.) 3.48 4.6 3,489,189,840 0.28 Not Applicable Not Applicable
122
Value Added Statement

2011/12 2010/11 Rs. % Rs. %
Value Added Interest and similar income Interest expenses Other income Provision for bad debts Value Addition 2,470,103,551 (699,105,563) 1,770,997,988 406,183,847 (127,968,110) 2,049,213,725 1,112,597,093 (410,109,443) 702,487,650 145,794,148 (69,048,638) 779,233,161
Distribution of Value Added To Service Providers Overhead and support services 360,458,940 17.59 189,156,120 24.27 To shareholder Dividends To the Government Taxes Salaries, wages and other benefits Depreciation Related earnings 409,586,647 493,764,660 27,116,918 758,286,560 2,049,213,725 19.99 24.10 1.32 37.00 100.00 221,815,637 296,012,348 12,154,671 60,094,385 779,233,161 28.47 37.99 1.56 7.71 100.00 To employees To expansion & growth
123
Six Year Summary

2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 OPERATING RESULTS Gross Income Net Interest Income Other Income Interest Expenses Operating Expenses Loan Loss Provision Profit/(Loss) Before Tax Income Tax Net Profit /(Loss) Dividend Paid 2,765,859 1,770,998 406,184 699,106 881,341 127,968 1,084,546 326,259 758,287 - 1,254,391 702,488 145,794 410,109 497,323 69,049 244,366 184,272 60,094 - 425,466 170,400 48,365 206,701 203,774 33,769 (25,942) 71,132 45,190 - 350,461 126,667 36,195 187,600 122,671 41,471 (1,280) 8,378 7,098 7,346 249,126 103,048 36,964 109,114 96,122 11,078 32,812 3,478 29,334 4,887 182,666 76,306 39,157 67,203 75,559 3,741 36,163 3,145 39,308 2,200
ASSETS Cash and Short Term Funds 140,961 203,708 51,924 12,578 5,342 4,985 Treasury Bills & Bonds 83,558 66,969 116,251 96,560 88,526 70,498 Placement with Banks & Other Finance Companies 365,372 110,560 9,707 11,170 8,408 8,197 Investment in Dealing Securities 39,698 24,940 55 55 55 55 Leases, Loans and Advances 8,647,621 4,435,050 1,690,317 817,964 796,805 608,398 Investments 202 5,427 202 202 202 202 Property Plant & Equipment 290,505 238,532 160,488 143,996 144,918 72,901 Other Assets 910,906 264,993 241,698 306,288 151,881 116,526 Total Assets 10,478,823 5,350,179 2,270,642 1,388,813 1,196,137 881,762 LIABILITIES Deposits 6,755,714 3,840,492 1,732,958 854,331 712,919 569,043 Borrowings 975,536 388,552 73,576 81,591 66,868 26,070 Other Liabilities 1,557,150 688,997 237,183 228,843 161,099 135,551 Total Liabilities 9,288,400 4,918,041 2,043,717 1,164,765 940,886 730,664
SHAREHOLDERS FUNDS Stated Capital 170,640 170,640 73,718 73,718 58,718 41,022 Reserves 1,019,784 261,497 153,206 150,330 196,533 110,076 Total Shareholders Funds 1,190,424 432,137 226,925 224,048 255,251 151,098 RATIOS Growth of Income (%) Growth of Net Profit (%) Interest Cover (times) Net Asset Growth (%) Equity Asset Ratio (%) Growth of Leases, Loans and Advances (%) Return on Average Assets (%) Return on Equity (%) Total Assets to Shareholders Funds (times) Fixed Assets to Shareholders Funds (times) Net Asset per Share (Rs.) Earnings per Share (Rs.) Dividend per Share (Rs.) 120.49 1161.83 2.55 175.47 11.36 94.98 13.70 93.47 8.80 0.24 5.46 3.48 - 194.83 32.98 1.60 90.43 8.08 162.38 6.41 18.24 12.38 0.55 1.98 0.28 - 21.40 536.66 0.87 1.28 9.99 106.65 -1.42 20.04 10.01 0.71 46.83 9.33 - 40.68 -75.80 0.99 -12.22 16.13 2.66 -0.10 2.96 6.20 0.64 46.23 1.46 1.52 36.38 -25.37 1.30 68.93 21.34 30.97 3.16 14.44 4.69 0.57 52.67 8.83 1.01 46.46 175.40 1.54 42.23 17.14 34.68 4.59 30.55 5.84 0.48 31.18 17.41 0.45
124
Glossary
[A]
Accounting Policies Principles, bases, conventions, rules and practices that are applied in recording transactions and in preparing and presenting financial statements. Accrual Basis The accrual principle is the concept that you should record accounting transactions in the period in which they actually occur, rather than the period in which the cash flows related to them occur. Amortization The systematic allocation of the depreciable amount of an intangible asset over its expected useful life.
[D]
Dealings Securities A debt or equity security bought and held for sale in the near term to generate income on short-term price changes. Deferred Taxation A sum set a side as tax expenses in the financial statements that may become payable/receivable in a financial year other than the current financial year. Depreciation The systematic allocation of the depreciable amount of a tangible capital asset or fixed asset over its useful life.
[I]
Impairment The value of an asset when the recoverable amount is less than its carrying amount. Interest Cover Earnings before interest and taxes for the year divided by total interest expenses. Interest in Suspense Interest suspended on non-performing accommodations. (Leases, hire purchases, loans and other advances) Interest Margin Net interest income expressed as a percentage of average total assets. Investment Securities Securities acquired and held for yield and capital growth purposes which are usually held to maturity.
[C]
Capital Adequacy Ratio The relationship between capital and risk weighted assets as defined by directives issued by the Central Bank of Sri Lanka. Cash Equivalents Short term highly liquid investments those are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Contingencies A condition or situation existing at Balance Sheet date where the outcome will be confirmed only by occurrence or non-occurrence of one or more future events. Corporate Governance The framework of rules and practices by which the Board of Directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders (financiers, customers, management, employees, government, and the community). Cost/Income Ratio Division of the operating costs (administrative and fixed costs, such as salaries and property expenses, but not bad debts that have been written off) by net income.
[E]
Earnings per Ordinary Share (EPS) Net income of a firm divided by the number of its ordinary shares held by shareholders. Equity Total of shareholders funds: share capital + statutory reserves + other reserves
[K]
Key Management Personnel People having authority and responsibility for planning, directing, and controlling the activities of an entity, either directly or indirectly. (The Board of Directors and Corporate Management)
[F]
Fair Value The amount for which an asset could be exchanged, or a liability settled, between knowledgable and willing parties in an arms length transaction. Finance Lease A contract whereby a lessor conveys to the lessee the right to use an asset for rent over an agreed period of time which is sufficient to amortize the capital outlay of the lessor. The lessor retains the ownership of the asset but transfers substantially all the risks and rewards of ownership to the lessee.
[L]
Liquid Assets Assets that are held in cash or can be converted into cash in a short time, with little or no loss in value.
[M]
Market Capitalaisation The total market value of all of a company's ordinary shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. Materiality Measure of the estimated effect that the presence or absence of an item of information may have on the accuracy or validity of a financial statement.
[H]
Hire Purchase A system by which a buyer pays for an asset in regular installments while enjoying the use of such asset. During the repayment period, ownership (title) of the asset does not pass to the buyer.
125
[N]
Net Asset Value per Ordinary Share Total net asset value of a company divided bythe total number ofordinary shares in issue. Net Interest Income Difference between revenue generated from interest bearing assets and interest incurred on interest bearing liabilities. Non Performing Accommodations A sum of borrowed money upon which the debtor has not made scheduled payments for at least 180 days. NPA Ratio Total Non Performing Accommodations (net of interest in suspense and other adjustments) divided by total accommodations (net of interest in suspense and other adjustments).
[R]
Reverse Repurchase Agreements The purchase of securities with the agreement to sell them at a specified price at a specified future date. Risk Weighted Assets On balance sheet assets and the credit equivalent of off balance sheet assets multiplied by relevant factors weighted by risk.
[S]
Segmental Analysis Separately reported results of individual business activities that are required for publicly-held companies. Shareholders Funds This consists of issued and fully paid up ordinary shares and reserves.
[P]
Price Earnings Ratio Market price of a share divided by earnings per share. Provision The amount of an expense that an entity elects to recognize now, before it has precise information about the exact amount of the expense.
[T]
Tier I Capital Core capital: representing permanent shareholders equity (paid-up shares) and reserves created or increased by appropriations of retained earnings or other surpluses, i.e, retained profits and other reserves. Tier II Capital Supplementary capital: representing revaluation reserves, general provisions and other capital instruments which combine certain characterisics of equity and debt, such as, hybrid capital instruments and unsecured subordiante term debt.
[R]
Related Parties Parties where one party has the ability to control the other party or exercise a significant influence over the other party in making financial and operating decisions, directly or indirectly. Related Party Transactions A business deal or arrangement between related parties. Return on Average Assets (ROA) Profit before tax divided by total average assets. Return on Equity (ROE) Profit after tax divided by total equity. Repurchase Agreements Contracts to sell and subsequently repurchase securities at a specified price at a specified future date.
[V]
Value Added Value of wealth created by providing financial and other related services less direct cost of providing such services.
[Y]
Yield Yield is the rate of return on an investment expressed as a percentage of the amount invested.
126
Notice of Meeting
NOTICE is hereby given that the Twenty Ninth Annual General Meeting of Commercial Credit and Finance PLC will be held at No.106, Yatinuwara Veediya, Kandy on 21st September, 2012 at 11.00 am for the following purposes: 1. To receive and consider the Audited Financial Statements for the Year Ended 31st March, 2012 together with the Report of the Auditors thereon and the Report of the Directors on the Affairs of the Company. To declare a First & Final Dividend of Rs. 1/- per Share for the Year Ended 31st March, 2012 as recommended by the Directors. (i) To re-elect Mrs Geya Rasi Egodage, Director, who retires by rotation in terms of Article 24 (6) of the Articles of Association of the Company. To re-elect Mr Ihala Gamaralalage Samantha Kumara Gunaratne, Director, who retires by rotation in terms of Article 24 (6) of the Articles of Association of the Company. To elect Dr. (Mrs) Erasha Fernando, Director, who retires in terms of Article 24 (2) of the Articles of Association of the Company.
2.
3.
(ii)
(iii)
4. 5.
To authorise the Directors to determine and make donations. To re - appoint the Auditors Messrs Ernst & Young, Chartered Accountants, to hold office until the conclusion of the next Annual General Meeting and to authorize the Directors to determine their remuneration.
BY ORDER OF THE BOARD JACEY AND COMPANY SECRETARIES 20th August, 2012
NOTE: 1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE IN HIS/HER STEAD. A PROXY NEED NOT BE A MEMBER OF THE COMPANY THE COMPLETED FORM OF PROXY MUST BE DEPOSITED AT THE REGISTERED OFFICE OF THE COMPANY AT NO.106, YATINUWARA VEE DIYA, KANDY NOT LESS THAN 48 HOURS BEFORE THE TIME FIXED FOR THE MEETING.
2. 3.
127
128
COMMERCIAL CREDIT AND FINANCE PLC Form of Proxy

I/We the undersigned ______________________________________________________________________________________________ of ______________________________________________________________________________________________________________ being a member/members of Commercial Credit and Finance PLC do hereby appoint_________________________________________ _ ______________________________ of ________________________________________________________________________________ whom failing MR C PERERA whom failing MR G G HEMACHANDRA whom failing MR R S EGODAGE whom failing MR H S K GUNARATNE whom failing MRS G R EGODAGE whom failing MR T SOMESWARAN whom failing MR M S D PINTO whom failing DR. (MRS) E FERNANDO as my/our Proxy to represent me/us and *__________________to vote on my/our behalf at the TWENTY NINTH ANNUAL GENERAL MEETING of the Company to be held on 21st September, 2012 and at any adjournment thereof, and at every poll which may be taken in consequence thereof. I/We the undersigned hereby authorise my/our proxy to vote on my/our behalf in accordance with the preference indicated below: 1. To receive and consider the Audited Financial Statements for the year ended 31st March, 2012 and the Reports of the Auditors and of the Directors thereon. To declare a First and Final Dividend of Rs. 1/- per Share for the Year Ended 31st March 2012 as recommended by the Directors. For Against
2.
3. Directors (i) To re-elect Mrs G R Egodage who retires by rotation in Terms of Articles 24(6) of the Articles of Association of the Company. To re-elect Mr I G S K Gunaratne who retires by rotation in terms of Articles 24(6) of the Articles of Association of the Company. To elect Dr. (Mrs) E Fernando who retires in terms of Articles 24(2) of the Articles of Association of the Company.
(ii)
(iii)
4. 5.
To authorise the Directors to determine and make donations. To re-appoint the Auditors Messrs Ernst & Young, Chartered Accountants, to hold office until the conclusion of the next Annual General Meeting and to authorize the Directors to determine their remuneration.
As witness my/our hand this ___________________day of_________________Two Thousand and Twelve.
_____________________________ Signature of Shareholder
Notes:
1 2 If you wish your Proxy to speak at the Meeting you should insert the words to speak and in the place indicated with an asterisk and initial such insertion. Please indicate with an x in the space provided how your Proxy is to vote. If there is in the view of the Proxyholder doubt (by reason of the way in which the instructions contained in the Proxy have been completed) as to the way in which the Proxyholder should vote, the Proxyholder shall vote as he/she thinks fit. A Proxyholder need not be a member of the Company Instructions as to completion appear on the reverse hereof
3 4
INSTRUCTIONS AS TO COMPLETION
1. To be valid this Form of Proxy must be deposited at the Registered Office of the Company at No.106, Yatinuwara Veediya, Kandy not less than 48 hours before the time appointed for the holding of the Meeting.
2.
The instrument appointing a Proxy shall in the case of an individual be signed by the appointor or by his Attorney and in the case of a Company/Corporation, the Proxy Form must be executed under its Common Seal, which should be affixed and attested in the manner prescribed by its Articles of Association or other constitutional documents. If the Proxy Form is signed by an Attorney, the relevant Power of Attorney or a notarially certified copy thereof, should also accompany the completed Form of Proxy if it has not already been registered with the Company. The full name and address of the Proxyholder and of the Shareholder appointing the Proxyholder should be entered legibly in the Form of Proxy.
3.
4.
Corporate Information
Company Name Legal Form Commercial Credit and Finance PLC Incorporated as a Private Limited Liability Company under the Companies Act No. 17 of 1982 on October 04, 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 and re-registered under the Finance Business Act No. 42 of 2011. The Company is registered under the Finance Leasing Act No. 56 of 2000. The shares of the Company were listed on Dirisavi Board of the Colombo Stock Exchange on 1st June, 2011. The Stock Exchange code for the Company share is COCR. Registration Number (Under the Companies Act No. 17 of 1982) New Registration Number (Under the Companies Act No. 07 of 2007) Place of Incorporation Registered Office Telephone Fax E-mail Website Board of Directors N(PBS) 62 PQ 269 Kandy, Sri Lanka No. 106, Yatinuwara Veediya, Kandy, Sri Lanka +94 (0)81 2234963 - 4 +94 (0)81 2234390 ccl@cclk.lk www.cclk.lk Mr C Perera (Independent Non-Executive Director) - Chairman Mr R S Egodage (Executive Director) - Chief Executive Officer Mr G G Hemachandra (Executive Director) Mrs G R Egodage (Executive Director) Mr S K Gunarathne (Independent Non-Executive Director) Mr T Someswaran (Independent Non-Executive Director) Mr M S D Pinto (Independent Non-Executive Director) Dr. (Mrs) E Fernando (Independent Non-Exective Director) Jacey & Company No. 9/5, Thambiah Avenue, Colombo 07 Julies & Creasy No. 41, Janadhipathi Mawatha, Colombo 01 Ernst & Young Chartered Accountants No. 201, De Saram Place, Colombo 10 Commercial Bank of Ceylon PLC Hatton National Bank PLC Nations Trust Bank PLC Sampath Bank PLC National Development Bank PLC Seylan Bank PLC Mr T Someswaran (Chairman) Mr C Perera Mr S K Gunarathne Mr C Perera (Chairman) Mr S K Gunarathne Mr T Someswaran Mr R S Egodage Mr Shriyantha Perera Mr S K Gunarathne (Chairman) Mr C Perera Mr Sebasthiyan Nanayakkara Mr Janaka Deshapriya Mr Andrew Samuel Ms Vathsala Sathiyakeerthi Peoples Bank Bank of Ceylon Hongkong & Shanghai Banking Corporation Limited Deutsche Bank Pan Asia Banking Corporation PLC
Secretaries Lawyers Auditors
Bankers
Audit Committee
Remuneration Committee
www.cclk.lk
DESIGN BY ARUNA WICKRAMARACHCHI TEL: 071 4943864 PRINTED AT DESIGN SYSTEMS

Annual Report 2011-2012

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LOVE

our shared values

the values we hold dear to our hearts....

loving and caring

integrity and trust

COMMERCIAL CREDIT AND FINANCE PLC ANNUAL REPORT 2011/2012

learning and development

synergy and team work

value song and value badges

COMMERCIAL CREDIT AND FINANCE PLC ANNUAL REPORT 2011/2012

value policy - process flow

report to the immediate supervisor of the doer

evaluate the conduct and forward the recommendation to rvc

assess and rank the conduct as bronz, silver, gold or platinum

approve or amend the decision of rvc

COMMERCIAL CREDIT AND FINANCE PLC ANNUAL REPORT 2011/2012

Management Discussion & Analysis

119 120 123 124 127

COMMERCIAL CREDIT AND FINANCE PLC ANNUAL REPORT 2011/2012

COMMERCIAL CREDIT AND FINANCE PLC ANNUAL REPORT 2011/2012

COMMERCIAL CREDIT AND FINANCE PLC ANNUAL REPORT 2011/2012

COMMERCIAL CREDIT AND FINANCE PLC ANNUAL REPORT 2011/2012

[Profit After Taxation]

[Total Deposit Base]

[Loans & Advances, Lease and Hire Purchase]

COMMERCIAL CREDIT AND FINANCE PLC ANNUAL REPORT 2011/2012

1,254,391 702,488 244,366 60,094

120.49 152.10 343.82 1,161.83

432,137 3,840,492 388,552 4,435,050 5,350,179

175.47 75.91 151.07 94.98 95.86

0.28 1.98 Not Applicable

1,142.86 175.47 Not Applicable

6.41 1.60 8.08 4.92 18.24 Not Applicable

113.68 59.87 40.65 (32.11) 412.54 Not Applicable

11.65 5.25 6.76

23.67 96.95 62.57

COMMERCIAL CREDIT AND FINANCE PLC ANNUAL REPORT 2011/2012

Events during the Financial Year

Branch Opening - Badulla

1st Year Anniversary Celebrations of Microfinance

Microfinance Customer Motivational Programme - Kurunegala

Sirasa Cricket Carnival - Anuradhapura Ice Cream Dansala

Blood Donation Campaign- Kurunegala

Finance House Association Sports Meet 2011

Commercial Credit and Finance

Listing on Colombo Stock Exchange

Branch Opening - Moratuwa

Branch Opening - Gampaha

COMMERCIAL CREDIT AND FINANCE PLC ANNUAL REPORT 2011/2012

Kite Festival - Gampaha

UDC Business Awards in 2011, MalaysiaBest Finance Company in Asia

Family Day - Dambulla Region

Branch Opening - Nugegoda

Champions - SLIM Business Awards, 2011

Sirasa Cricket Carnival - Embilipitiya, Ragama, Gampola, Matale and Matara

Strategic Planning Launch

Family Day - Anuradhapura Region

Microfinance Motivational Programme - Negombo

Microfinance Customer Motivational Programme - Kandy

Family Day - Gampaha, Negombo, Nugegoda

COMMERCIAL CREDIT AND FINANCE PLC ANNUAL REPORT 2011/2012

Sirasa Cricket Carnival - Finals

Family Day - Head Office