Annual Report.CDR - Colombo Stock Exchange

C O N T E N T S 

Financial Highlights 

Corporate Information 

Notice of Meeting 

Key Executives Message 

Review of Operations 

Report of the Directors 

Risk Management 

Corporate Governance 

Statement of Directors' Responsibilities in Relation to Financial Statements 

Audit Committee Report 

Independent Auditors Report 

Income Statement 

Balance Sheet 

Statement of Changes in Equity 

Cash Flow Statement 

Significant Accounting Policies 

Notes to the Financial Statements 

Shareholders' Information 

Ten Year Summary 

Branch Network/ Service Centres/ Agro Branches/ Divisions 

02 

03 

04 

05 

06-07 

08-11 

12 

13-14 

15 

16 

17 

18 

19 

20 

21 

22-30 

31-55 

56-57 

58 

59-62 

Form of Proxy 

T H E F I N A N C E C O . P L C - A N N U A L R E P O RT 2 0 0 9 - 2 0 1 0 

01

F I N A N C I A L H I G H L I G H T S 

FINANCIAL HIGHLIGHTS 

RESULTS 2009/10 2008/09 2007/08 2006/07 2005/06 

Rs. Rs. Rs. Rs. Rs. 

Net Revenue 5,203,999,903 10,640,478,032 11,306,845,221 10,986,560,862 7,888,689,082 

Profit/(Loss) before Taxation (4,285,937,283) (2,563,400,716) 503,725,805 837,553,340 603,210,137 

Net Profit/(Loss) for the year (4,285,937,283) (2,563,400,716) 662,618,527 762,553,340 583,210,137 

Dividends - - 36,754,857 36,754,857 36,754,857 

Total Assets 27,454,894,383 36,704,551,395 40,154,382,776 31,474,690,449 25,083,305,694 

Public Deposits 25,747,254,728 27,065,133,232 28,575,643,296 21,824,381,864 17,190,234,562 

Stated Capital 410,180,756 410,180,756 410,180,756 410,180,756 410,180,756 

Reserves (3,326,987,052) 1,067,825,144 3,616,636,545 2,496,039,370 1,770,240,888 

Earnings per Share 

(Profit after Tax/ No. of Shares) (Rs.) (209.90) (125.54) 32.45 37.34 28.56 

Dividend per Share 

(Dividend / No. of Shares) (Rs.) - - 1.80 1.80 1.70 

Net Assets Value per Share 

(Net Assets/ No. of Shares) (Rs.) (142.85) 72.38 197.21 142.33 106.78 

Current Ratio 

(Current Assets/ Current Liabilities) 0.64 0.67 0.72 0.67 0.70 

Debt Equity Ratio 

(Long-term Borrowings / Net Assets) % (39.08%) 99.87% 41.76% 62.04% 88.38% 

Return on Average Shareholders' Funds 

(Profit/(Loss) after Tax / Avg. Share holder's Fund) % - (93.13%) 19.11% 29.98% 30.60% 

Price Earning Ratio 

(Market Value per share / Earning per share ) (Times) - - 1.94 1.29 2.11 

Dividend Cover 

(Profit/(Loss) after Tax / Dividends ) (Times) - - 18.03 20.75 15.87 

Dividend Yield 

( Dividend per share/ Market Value per Share) % - - 2.86% 3.75% 2.99% 

Earning Yield 

(Earning per Share / Market Value per Share) % - - 51.51% 77.80% 47.40% 

Market Value per Share Rs. Rs. Rs. Rs. Rs. 

Highest value recorded during the Financial Year 26.00 65.00 69.75 78.50 69.50 

Lowest value recorded during the Financial Year 17.50 21.00 33.25 47.00 28.50 

Value at the end of the Financial Year 17.50 22.00 63.00 48.00 60.25 


02

C O R P O R AT E I N F O R M AT I O N 

BOARD OF DIRECTORS 

K J Yatawara 

Director/CEO 

Mrs N C Rupasinghe 

Key Executive - Director 

Mrs V W Dissanayake 

B.A. 


T B Ekanayake 

Attorney at Law & Notary Public 


Deshamanya Dr J L B Kotelawala 

AMEX-A(Lond.), FBIM,FICM, 

FCIS, MICM(LOND.), FCIC 

HFIB (SRI LANKA) 

Mrs P K Karunanayeke 

Attorney-at-Law, FICM, MICM (Lond.) 

S R Wijesinghe 

Dip.(Busi. Admin.), FCIM. 

A R Gunawardena 

FCIC (SL) 

K A S Jayatissa 

BSc.(Mgt), Sp Hons., 

Dip in Acct. ACIS,FCA,FSCMA 

T N M Peiris 

BA (Econ) (Hons), FCA, FCIC(SL) 

Ms M Sabaratnam 

Attorney-at- Law & NP 

Y B Ratnayake 

B Com (Spl), A.C.A. 

MANAGING AGENT 

Merchant Bank of Sri Lanka PLC 

COMPANY SECRETARY 

Miss P S Watson FCIS 

COMPANY REGISTRATION NUMBER 

PQ – 1 

REGISTERED OFFICE 

No. 97, Hyde Park Corner, Colombo 2 

Tel No. 2682745 

HEAD OFFICE 

The Finance House 

No. 55, (Lauries Place) 

R A de Mel Mawatha 

Colombo 4. 

Tel Nos. 597613/2580210 

Web: www.thefinance.lk 

LAWYER 

Mr T B Ekanayake 

Attorney-at-Law & NP 

BANKERS 

Seylan Bank PLC 

People's Bank 

Commercial Bank of Ceylon PLC 

Hatton National Bank PLC 

AUDITORS 

M/s Tudor V Perera & Co 

Chartered Accountants 

AUDIT COMMITTEE 

T N M Peiris 

A R Gunawardena 

Y B Ratnayake 

LEGAL STATUS 

Incorporated under the Companies 

Ordinance No 51 of 1938. and re-registered 

under the Companies Act No 7 of 2007 

th 

Date of Incorporation – 30 May 1940 

Registered under the Finance Companies 

Act No 78 of 1988. 

Approved Credit Agency under the 

Mortgage Act No 6 of 1949 and Inland Trust 

Receipts Act No. 14 of 1990 

Registered under the Finance Leasing 

Act No. 56 of 2000 

Public Company Listed on the Colombo 

Stock Exchange. 


03

N O T I C E O F M E E T I N G 

th 

NOTICE IS HEREBY GIVEN THAT the 70 Annual General Meeting of the shareholders of The Finance 

Company PLC will be held at the Fingara Town and Country Club No 50/21 Old Kesbewa Road 

th 

Rattanapitiya, Boralesgamuwa on 29 November 2010 at 10.00 a m 

AGENDA 

1. To receive and adopt the report of the Directors and the Statement of Accounts for the year ended 

st 

31 March 2010 and to receive the report of the auditors thereon. 

2. To re-appoint the retiring Auditors and to authorize the Directors to determine their remuneration. 

3. To authorize the Directors to determine contributions to charities and other donations. 

4. Special Notice has been received from a shareholder of their intention to propose the under noted 

Ordinary Resolution in Compliance with Section 211 of the Companies Act No 7 of 2007. 

“That Deshamanya Dr J L B Kotelawala, who attained the age of 70 years on 29 

th 

October 2008 be 

and is hereby appointed a Director of the Company and it is hereby declared that the age limit of 

70 years referred to in section 210 of the Companies Act No 7 of 2007 shall not apply to the said 

Deshamanya Dr J L B Kotelawala”. 

By Order of the Board 

The Finance Co. PLC 

(Sgd.) Miss P S Watson 

Company Secretary 

14 

th 

October 2010 

NOTES 

A member entitled to appoint a proxy to attend and vote for him/her. 

A proxy need not be a member of the Company. 

A form of proxy is enclosed for this purpose. 

The instrument appointing a proxy should be deposited at the Head office at No 55, Lauries Place R A De 

Mel Mawatha Colombo 4 not less than 48 hours before holding of the meeting. 

Shareholders/Proxy holders attending the Annual General Meeting are kindly requested to bring with them 

their National Identity Card or any other valid form of identification. 


04

K E Y E X E C U T I V E S M E S S A G E 

On behalf of the Board of Directors, we are presenting to you the Annual Report and the Audited Financial 

st 

Statements for the year ended 31 March 2010. During the year under review, the Company faced many 

obstacles with regard to investments and disposal of real estate stock, since legal restrictions were imposed due 

the crisis in the Ceylinco Group of Companies and deteriorated public confidence. As a result the interest 

income declined by Rs 2,893 Mn whereas the interest expenses reduction was only Rs. 1,808 Mn. In November 

2009 the Company was successful in obtaining legal clearance and was able to engage in its normal course of 

business. 

The Real Estate and Property market which showed a decline in the beginning of last year due to the economic 

th 

downturn continued in to the 4 Quarter of the financial year with a marginal improvement. This together with 

the restriction faced by the Company on transfer of Real Estate assets resulted in a reduction of land sale income 

by Rs 337 Mn for the year under review. 

The Company also had exposure to several Ceylinco Group Companies as a provider of funds and the down 

turn in the business of these companies due to the same reason affected the Company which lead to nonservicing 

of such lending and creating liquidity pressure to the Company. The Company is in the process of 

recovering such loans. 

We also took steps to restructure our balance sheet by making provisions for some of the loans given to group 

companies amounting to Rs 1,100 Mn and for the investment in unquoted securities in companies of Ceylinco 

Group amounting to Rs 92 Mn. In addition provisions were also made for Bad Debt for loan losses amounting to 

Rs. 593Mn. As announced by the Central Bank of Sri Lanka the Company will be making a public issue of 

ordinary shares (voting) and Non-voting Ordinary Shares to the fixed deposit holders shortly and a new board 

will be constituted which will strengthen the Company. 

The Company's public deposit base reduced by Rs 1,318 Mn and the loss increased by Rs 1.7 Bn from the last 

financial year to end up with Rs 4,286 Million for the year under review due to reasons stated above. 

st 

The first quarter of the financial year ending 31 March 2011 showed a remarkable growth in all areas of the 

Company. The Company was able to enhance public confidence which resulted in Rs 450 mn new deposits 

being brought into the Company in this quarter. The real estate market which was not buoyant in the last 

financial year has improved during the first quarter of this financial year and all new projects handled during 

this period had been successful. 

th 

The Company having stepped to its 70 year of operations, we wish to thank all our stakeholders for being with 

us during difficult times and helping the Company to overcome the many hardships faced. We also wish to 

express our sincere appreciation to the official of the Central Bank of Sri Lanka and Managing Agents during 

this period namely Lankaputhra Development Bank and Merchant Bank of Sri Lanka PLC for extending their 

support and expertise to stabilize the Company and its operations and also to the staff for their dedication and 

commitment to achieve the goals set by the management to resurrect the Company 

. 

Sgd sgd sgd sgd 

K J Yatawara Mrs N C Rupasinghe Mrs V W Dissanayake T B Ekanayake 

Director/CEO Key Executive –Director Key Executive –Director Key Executive –Director 

14th October 2010 


05

R E V I E W O F O P E R AT I O N S 

Economic Environment 

The economy of Sri Lanka demonstrated a growth of 3.5 percent in 2009 largely due to the remarkable growth 

of 6.2 percent in last quarter of 2009. This notable growth was achieved despite spillover effects of the global 

financial and economic crisis. Further withdrawal of capital by foreign investors due to adverse global 

conditions placed severe strain on country's foreign reserves and management of liquidity. But the timely 

policy actions of CBSLin securing of Stand byArrangement from IMF were instrumental in recovery in second 

half of 2009. 

A notable achievement in 2009 was the continuous reduction in average inflation rate to 3.4 percent in 2009 

lowest since 1985. 

The CBSL's decision on reduction of policy interest rates resulted in a substantial downward adjustment of 

interest rates in the market. However the demand for credit from the private sector remained weak largely due to 

slow recovery of domestic and global economies as well as cautious approach in lending by financial 

institutions. 

Regulatory Environment 

The regulatory framework of RFCs is being strengthened in order to make the Board of Directors of RFCs 

responsible and accountable for the companies' performance and risk management. The listing on the Colombo 

Stock Exchange has been made compulsory for RFCs in order to broaden the share ownership and 

transparency. Many directions on reporting requirements were imposed to grant more powers to CBSL in order 

to regulate RFCs. 

Performances of the Registered Finance Companies (RFCs) 

The performance of RFCs sector in terms of profitability, earnings and capital adequacy was adversely affected 

due to decline in demand for new credit and failure of some finance companies. 

The growth of total assets of RFCs slowed down as a result of above. The total assets grew by 5 percent in 2009 

to Rs. 185 billion compared to 23 percent recorded in 2008. 

The growth of accommodation granted to some sectors slowed down as most RFCs curtailed lending to hire 

purchasing and leasing. Total accommodation granted by RFCs increased by 3 percent only as at 2009 to Rs. 

116 billion compared to 17 percent in 2008. Accommodations to lease facilities decreased by 1.3 percent while 

hire purchase facilities increased slightly by 0.3 percent. Owing to current depression in real estate, loan 

facilities on real estate declined considerably by 22.4 percent to Rs. 8.3 billion in 2009. In relation, the RFCs 

that had a large volume of real estate from total asset portfolio were exposed to a significant liquidity risks due 

to inability to dispose in the short term. Meanwhile advances on pawning increased considerably by 36 percent 

in 2009 to Rs. 7.5 billion. 

The major source of the funds of RFCs continued to be public deposits. However the growth of public deposits 

slowed down to 16 percent in 2009 compared to 32 percent in 2008. 

The stability of the RFCs sector was maintained by CBSL through several steps taken to restore public 

confidence mainly by appointment of managing agents to assist distress finance companies, appointment of 

panel of experts to advice on the recovery process, introduction of a Special Stimulus Package, introduction of a 

guarantee system in respect of loan facilities provided by banking sector to RFCs. 


06

R E V I E W O F O P E R AT I O N S 

The Company Performances 

As a result of decline in demand for new credit facilities and 

current depression in real estate market, the net revenue of the 

Company decreased to Rs. 5.2 billion in 2009/10 from Rs. 

10.6 billion in 2008/09. 

The interest income of the Company declined by 43 percent 

during the year under review mainly due to decline in new 

credit facilities to compensate the depletion of current 

facilities. 

The interest expense for the same period decreased by 27 

percent mainly due to the reduction of deposit rate in line with 

reduction in Treasury Bill rates and decrease in borrowings 

rates. 

Movement in Treasury Bill Rate (3 months) 

25 

20 

15 

10 

5 

0 

2005 2006 2007 2008 2009 

Real Estate 

The real estate and housing projects balance stood at Rs. 6.8 

billion mainly due to the depression in real estate market. 

Public Deposits 

The Company sustained its market leadership in holding a 

largest public deposit base in the non banking financial sector 

in the year under review. This reflects the customers' 

continued confidence in the Company. But with the collapse 

of some unauthorized financial institutions which created a 

loss of confidence among deposit holders, the Company 

experienced high deposit withdrawals during the year thus 

reducing the public deposit balance by 5 percent for the year 

ended 2009/10 to Rs. 25.7 billion from Rs. 27.1 billion for the 

year ended 2008/09. 

Public Deposits (Rs. Mn) 

30000 

25000 

20000 

15000 

10000 

5000 

0 

31-03-2005 

31-03-2006 

31-03-2007 

31-03-2008 

31-03-2009 

31-03-2010 

Assets and Liabilities 

The total assets of the Company decreased by 25 percent to Rs. 

27.5 billion as at end 2009/10 from Rs. 36.7 billion as at end 

2008/09 mainly due to the decline in new facilities and 

depletion of current facilities. 

The liabilities declined by 14 percent to Rs. 30.4 billion as at 

end 2009/10 from Rs. 35.2 billion as at end 2008/09. Decrease 

in public deposits and borrowings contributed mainly to the 

reduction. 

Hire Purchase and Leasing 

The loan portfolio on hire purchase and leasing as at end 

2009/10 showed a decrease of 47 percent to Rs. 5.5 billion 

compared to previous year end due to decline in new facilities 

thus failing to accommodate depletion of current facilities. 

Income Distribution (Rs. Mn) 

4500 

4000 

3500 

3000 

2500 

2000 

1500 

1000 

500 

0 

Hire 

Purchase 

Leasing Real 

Estate 

Others 

2008/09 

2009/10 

Collections 

During the year under review, the Company's non performing 

loan portfolio increased to 29.86 percent in end 2009/10 from 

14.34 percent in end 2008/09 owing to the depletion of 

performing loan portfolio including real estate financing. 

Further a loan loss provision of Rs. 594 million was made for 

the year 2009/10 (Rs. 635 million in the year 2008/09) in 

complying with Central Bank directions No. 1 of 1991. 

Future Prospects 

With the opening up of North and East sectors after end of 

three decades of civil war, a significant boom in the tourism 

sector, maintaining of downward trend in interest rates by 

CBSL, gradual building of confidence amongst public on the 

financial sector and reduction in inflation rate, the Company 

forecasts an increase in demand for financial and real estate 

products in the future. 


07

R E P O RT O F T H E D I R E C T O R S 

The Directors have pleasure in presenting to the shareholders their Report together with the Audited 

financial statements of the Company for the year ended 31 

st 

March 2010. The report contains the 

disclosures required to be made by the Companies Act 7 of 2007 and the listing rules of the Colombo 

Stock Exchange. 

The Company was incorporated as a Public Limited Liability Company in Sri Lanka on May 1940 

th 

and was re-registered under the Companies Act No 7 of 2007 on 4 June 2007. The Company's Re- 

Registration Number is PQ 1. 

PRINCIPALACTIVITIES 

Financing and Real Estate business continued to be the principal activities of the Company. 

REVIEW OFOPERATIONS 

Review of operations is given on pages 06 to 07 of theAnnual Report. 

PROFITSANDAPPROPRIATIONS 

st 

The following is an extract of the Profit and LossAccount for the year ended 31 March 2010 

2009/2010 (Rs) 2008/2009 (Rs) 

Net profit before Taxation (4,285,937,282) (2,563,400,716) 

Less: Provision for Taxation on the profits for the 

- - 

year 

Net Profit after Taxation (4,285,937,282) (2,563,400,716) 

Less Unappropriated loss brought forward 

(2,671,806,920) (108,406,204) 

Amount available for appropriation (6,957,744,202) (2,671,806,920) 

Your Directors recommend the following 

appropriations 

- 

- 

Transfer to Reserve Fund 

Transfer to General Reserve 

- 

- 

First and Final Dividend (Gross) 

- 

- 

Total appropriation 

- - 

¤ 

Balance to be carried forward (6,957,744,202) (2,671,806,920) 


08

R E P O RT O F T H E D I R E C T O R S ( C O N T D . ) 

DIRECTORATE 

st 

The following were the directors as at 31 March 2010 

Mr K. J.Yatawara , Mrs. V.W. Dissanayake, Mr T B Ekanayake, Mrs N. C. Rupasinghe, 

Deshamanya Dr J.L.B.Kotelawala, Mrs. P.K. Karunanayake, Mr S.R. Wijesinghe, 

MrA.R. Gunawardena, Mr K .A.S. Jayatissa, Mr T.N.M. Peiris, MrY. B. Ratnayake, 

Ms. M. Sabaratnam. 

Special Notice has been received from a shareholder of their intention to propose the under noted 

Ordinary Resolution in Compliance with Section 211 of the CompaniesAct No 7 of 2007. 

th 

“ That Deshamanya Dr J L B Kotelawala, who attained the age of 70 years on 29 October 2008 be 

and is hereby appointed a Director of the Company and it is hereby declared that the age limit of 70 

years referred to in section 210 of the Companies Act No 7 of 2007 shall not apply to the said 

Deshamanya Dr J LB Kotelawala”. 

Pursuant to a letter received by from the Central Bank of Sri Lanka the executive functions of the 

Board as entrusted to four key executives namely Mr K J Yatawara, Mrs N C Rupasinghe, Mrs V W 

Dissanayake and Mr T B Ekanayake. 

In pursuance to the adoption of new set of Articles of Association at an Extra Ordinary General 

Meeting on 3 

rd 

January 1994, the retirement of Directors by rotation does not arise. 

DIRECTORS SHAREHOLDING 

The following are the shareholdings of the Directors of the Company as at 31 

st 

March 2010. 

Name 

31 st March 2010 31 st March 2009 

Worker Ordinary Shares 

Shares 

Ordinary 

Shares 

Worker 

Shares 

Mr K J Yatawara- Director/CEO 120 3,636 120 3,636 

Mrs N C Rupasinghe 822 9,268 822 9,268 

Mrs V W Dissanayake 1,346 11,986 1,346 11,986 

Mr T B Ekanayake 167 3,388 167 3,388 

Deshamanya J L B Kotelawala 526,427 46,232 526,427 46,232 

Mrs P K Karunanayeke 20,563 38,527 20,563 38,527 

Mr S R Wijesinghe 15,949 7,800 15,949 7,800 

Mr A R Gunew ardena* 2,244 Nil 2,244 Nil 

Mr K A S Jayatissa 4,180 Nil 4,180 Nil 

Mr T N M Peiris 6,800 Nil 6,800 Nil 

Mr Y B Ratnayake 617 4,220 617 4,220 

Ms M Sabaratnam 4,282 15,447 4,282 15,447 

*MrAR Gunawardena in addition to the shares mentioned above holds 2,601 shares with his wife Mrs K S Gunewardena 


09


DIRECTORS' EMOLUMENTSAND MANAGINGAGENT FEE 

The Directors emoluments are disclosed in Note 06 to the Financial Statements found on Page 32 of theAnnual 

Report. 

The Monetary Board of the Central Bank of Sri Lanka appointed Merchant Bank of Sri Lanka PLC as the 

managing agent with effect from 22 

nd 

May 2009 onwards at a fee of Rs. 5,000,000/- for the first two months and 

thereafter Rs. 3,000,000/- per month. In the year of 2009/10 total amount paid to MBSL is Rs. 36,750,000/- 

without VAT. 

HUMAN RESOURCES 

The Company has 1166 employees engaged in the head office and the Branches Island wide as at 31 

st 

March 

2010. The Company adopts a recruitment policy that offers equal career opportunities with non-discrimination 

on gender, race or religion. Thereby the Company has been able to retain the staff with the right Skill, 

Knowledge and Attitude who have contributed towards overcoming the crisis situation faced during the 

financial year, which is commendable. 

The employees who have completed five years in service are granted worker shares (unquoted) as decided by 

the Board of Directors which can be en-cashed on retirement/ resignation. 

PROPERTYPLANTAND EQUIPMENT 

The capital expenditure on Property Plant and Equipment during the year under review is set out in Note 22 to 

the Financial Statements appearing in page 43 of theAnnual Report. 

STATED CAPITAL 

There was no change in the Stated Capital of the Company during the year under review. The Stated Capital of 

the Company is Rs 410,180,756/- represented by 17,966,232 Ordinary shares (Quoted) and 2,453,133 

(Unquoted) worker shares. 

SHAREHOLDING 

st 

There were 9994 shareholders as at 31 March 2010 and the analysis in shown on page 56 of theAnnual Report. 

The percentage of the shares held by the public is 50.98% 

DIVIDENDS 

st 

The Company will not be paying a Dividend for the year ended 31 March 2010. 

RESERVES 

The movement of reserves is shown on Statement of Changes in Equity in the Financial Statements appearing 

on page 20 of theAnnual Report. 


10


INTEREST REGISTER 

The Company maintains an Interest Register in Compliance with the Companies Act No. 7 of 2007. 

The details of the Shareholdings of Directors have been disclosed in this report and there have been 

no changes in the holdings of the Directors for the year under review. The Directors of Company has 

made general disclosures regarding related party disclosures and these disclosures are appearing in 

Note 36 to the Financial Statements appearing on page 50 of theAnnual Report. 

GOING CONCERN 

Astatement relating to the going concern is disclosed in Note 39 to the Financial Statement appearing 

on page 52 of theAnnual report. 

CONTRIBUTION TO CHARITIES 

st 

The Company has not made any contributions to charities for the financial year ended 31 March 2010 

CORPORATE GOVERNANCE 

The Board has taken necessary measures to ensure proper systems and procedures are in place within 

the Company thereby adopting a sound Corporate Governance practice. With the current 

restructuring process necessary steps will be taken to comply with the mandatory requirements of the 

Colombo Stock Exchange and the Corporate Governance Direction issued by the Monetary Board of 

the Central Bank of Sri Lanka. 

POST BALANCE SHEET EVENTS 

Subsequent to the date of the Balance Sheet no circumstances have occurred which would require any 

disclosure in the Accounts, other than those disclosed in note 37 to the financial statements found on 

page 52 of theAnnual Report. 

ACCOUNTING POLICIES 

There have been no changes in the Accounting Policies adopted by the Company since the last 

Balance Sheet date. 

AUDITORS 

The Accounts for the year have been audited by M/s Tudor V Perera & Company, Chartered 

Accountants, who offer themselves for re appointment 

The retiring auditors (an independent firm) have indicated their willingness to continue in office and 

a resolution to re-appoint them and to authorize the Board to determine their remuneration will be 

proposed at the forthcomingAnnual General Meeting. 

st 

The Auditors have been paid a fee of Rs 1,500,000.00 as Audit Fee for the financial year ended 31 

March 2010 which has been approved by the Board. 

The Directors recommend their re appointment 


Sgd. K JYatawara Sgd. Mr T B Ekanayake (Sgd) Miss PS Watson 

Director/CEO Key Executive-Director Company Secretary 

th 

14 October 2010 


11

R I S K M A N A G E M E N T 

As a registered finance company The Finance Company PLC is subject to the regulations and 

directions of the Central Bank of Sri Lanka (CBSL). It is under the purview of Department of 

Supervision of Non Banking Financial Institutions of CBSL. 

A finance company is generally subject to the risks associated with maturity mismatch of its assets 

and liabilities. The liabilities which consist mostly of public deposits carry maturities up to one year 

whilst the advances made are repaid over periods ranging up to four years. The ability of the 

organization to attract new deposits and to renew a significant percentage of the maturing deposits 

permits it to manage the associated liquidity risk. The re pricing of the liabilities ahead of the assets 

carries significant interest rate risk and impact on profitability when interest rates are rising. However 

the margin on lending is expected to mitigate and absorb this risk. 

The Key Executives of the company review the strategic and market risks impacting the 

organization. The business portfolio of the company includes land purchased for development and 

selling which carries significant business risks in the present market. Emerging growth areas such as 

infrastructure development, tourism etc in the economy provides opportunities to this company. 

Monthly performance is reviewed against targets to identify and rectify any deficiencies. 

Internal Audit department of the company carries out periodic reviews of the effectiveness of the 

systems and procedures in addition to verifying compliance. The Audit Committee reviews these 

reports and the actions taken to address the issues if any identified by the Internal Audit. External 

Audit also provides a management letter identifying areas which need management attention and 

these are addressed by the company. 

The company intends developing a comprehensive risk management policy and establishing a Risk 

Management Committee andAsset Liability Committee in the near future. 


12

C O R P O R AT E G O V E R N A N C E 

At TFC, we are committed towards having excellent Corporate Governance practices in place and applying 

highest standards of integrity in all our activities thereby gaining investor confidence and to maintain the 

right balance in the interest of all its stakeholders. In this section, we explain our Corporate Governance 

practices and structure that were in practice during the last financial year. 

The Board of TFC consists of 12 members and is in compliance with item 4.1 of Corporate Governance 

Direction No 3 of 2008 for Finance Companies. In February 2009 the Monetary Board by the powers vested in 

them identified four Key Executives from the present Board to run the day to day affairs of the Company along 

with a managing agent who was appointed to look into the affairs of the Company with the assistance of the 

expert group. 

The Board of Directors is committed to comply with the code on Corporate Governance and 

enforce sound Corporate Governance practices within the Company. The Board meets once a month to discuss 

and review/approve/make decision on important matters, which are listed below. 

· 

· 

ThemonthlyperformanceoftheCompanyandBranches/DivisionsagainstPlansandbudgetswith 

specialconsiderationonanydeviationsfromplan. 

RecoveryPlansthatareputforwardbytheSeniorManagement 

InternalControlReport 

RiskManagementReport 

BudgetsandPlans 

Specialmattersasandwhenrequired 

The Board met in 13 occasions during the year under review and the following is the attendance at such 

meetings. 

Name of Director Position Executive/Non- 

Executive 

Attendance at 

Board Meeting 

Mr K J Yatawara Director/CEO Executive 13/13 

Mrs N C Rupasinghe Key Executive Director Executive 11/13 

Mrs V W Dissanayake Key Executive Director Executive 13/13 

Mr T B Ekanayake Key Executive Director Executive 13/13 

Desh. J L B Kotelawala Director Non-Executive N/A 

Mrs P K Karunanayeke Director Non-Executive N/A 

Mr S R Wijesinghe Director Non-Executive 08/13 

Mr A R Gunewardena Director Non-Executive 08/13 

Mr K A S Jayatissa Director Non-Executive 11/13 

Mr T N M Peiris Director Non-Executive 08/13 

Mr Y B Ratnayake Director Non-Executive 10/13 

Ms M Sabaratnam Director Non-Executive 06/13 

Since the Company is undergoing a restructuring process, the Board has been chaired by the Chairman of 

Managing Agent Company appointed by the Monitory Board of the Central Bank of Sri Lanka. There is no 

material relationship between the CEO and the Chairman of the Managing Agent and the other Board 

Members. The composition of independent Directors will be looked into once the restructuring process is 

completed. 

Apart from the normal scheduled meetings, special meetings are arranged if circumstances warrants. Both 

Executive and non-executive board members participate in these meetings. 

In addition, monthly Senior Management Meetings are organized to cover areas such as Collection, Marketing, 

Information Technology and Administration which are held in order to ensure compliance with set standards 

and procedures. These meetings are attended by Executive Directors and the Senior Management staff where 

all issues at operational levels are dealt with, ensuring timely and accurate decision-making. 


13

C O R P O R AT E G O V E R N A N C E ( C O N T D . ) 

Audit Committee 

The Board has formally constituted the Audit Committee comprising of five Non-Executive Directors to 

carryout the control procedure efficiently and professionally. With the restructuring of the Board in February 

2009, the Board together with the Managing agent (MBSL) sought the approval from the Central Bank of Sri 

th 

Lanka to reconstitute the Audit Committee. The approval to establish a Audit Committee was received on 10 

December 2009 consisting of three Non-Executive Directors. TheAudit Committee met three times during the 

st 

th 

period under review and four times since 1 April 2010 to 30 August 2010 and the Head of Finance and 

representatives of Internal and ExternalAuditors also attend theseAudit Committee meetings. Their functions 

include the following: 

· 

· 

· 

· 

· 

InternalAudits 

Implementing effective Internal control system and reviewing internal and external audit plans 

Implementing Auditor's significant recommendations and ensuring that sound financial reporting 

system exist within the Company. 

Ensure that the Company complies with all relevant statutory polices and requirements and, fair and 

accurate information are provided to all stakeholders. 

To review and monitor the external auditors independence and objectivity and the effectiveness of the 

audit process in accordance with applicable standards and best practices. 

To review the monthly, quarterly and annual financial statements of the Company before these are 

submitted to the Board of Directors and assess whether these are prepared in accordance with the Sri 

LankaAccounting Standards and the requirements of the CompaniesAct 

The Board also appointed a Remuneration Committee, an Integrated Risk Management Committee and a 

Assets and Liability Committee and is awaiting for the formal approval of the Central Bank of Sri Lanka 

Apart from the above meetings, the Internal Control Division continuously to assess the effectiveness of the 

financial and operational control systems and submits a report on the findings to the Chairman/ Managing 

Director andAudit Committee. 

, 

ExternalAudits 

The External Auditors are appointed by the shareholders at the Annual General Meetings and are responsible 

for giving their opinion on the financial statements prepared by the Company. 

The Central Bank also conducts its audits to ensure that the Company Complies with the regulations laid down 

by the Central Bank of Sri Lanka. In addition, a reporting system is in place, which requires the Company to 

submit detailed reports concerning key areas of operations on a weekly/monthly/quarterly/ annually to the 

Non-banking Supervision unit of Central Bank. 

Transparency and Compliance 

The Board endeavors to ensure transparency of its operations by preparing and circulating to their shareholders 

the Annual Reports and its quarterly financial statements of the Company. In addition the company also 

publishes the bi annual and year end un-audited financial statements in all three languages in the national press. 

The statutory compliance report is submitted to the Board at their meetings by the Head of Finance. The report 

indicates the conformance with the statutory regulations and any deviations thereof. 


14

STATEMENT OF DIRECTORS RESPONSIBILITIES IN RELATION TO FINANCIAL STATEMENTS 

The Directors are required by relevant statutory provisions to prepare financial statement for each 

financial year ,which gives a true and fair view of the State ofAffairs of the Company for that period. 

For the period under review the statutory provisions are in the CompaniesAct No 7 of 2007, Finance 

Leasing Act. No 56 of 2000 and the Finance Companies Act No 78 of 1988 . In preparing the 

Financial Statements appropriate accounting policies have been selected and applied consistently 

and reasonable and prudent judgment and estimates have been made. The applicable Sri Lanka 

Accounting Standards have been followed and explained in the notes to the Financial Statements. 

The Directors are responsible for ensuring that the Company keeps sufficient Accounting records to 

disclose with the reasonable accuracy of the financial position of the Company and to ensure that the 

Company's Financial Statements comply with the provisions of the Companies Act No .7 of 2007, 

Finance Leasing Act No. 56 of 2000 Sri Lanka Accounting Standards and the Finance Companies 

Act No.78 of 1988 . 

The Directors are also responsible to ensure that reasonable measures are taken to safe guard the 

assets of the Company at all times. In this context they have established appropriate system of 

internal controls with a view to preventing and detecting of frauds and other irregularities. 

In preparing Accounts the Directors continue to adopt the going concern basis. The Directors after 

reviewing the Company's Budget and borrowing facilities consider that the Company has adequate 

resources to continue in operation. 


(Sgd.) 

Miss PS Watson 

Company Secretary 

14th October 2010 


15

A U D I T C O M M I T T E E R E P O RT 

The Audit Committee of The Finance Company PLC was formally constituted in November 1998. Since the 

reconstitution of the Board by the Monetary Board of the Central Bank of Sri Lanka permission was granted in 

December 2009 to reconstitute theAudit Committee with the following Non-Executive Directors: 

Mr T N M Peiris – Chairman ofAudit Committee 

MrAR Gunawardena - Non Executive Director 

MrYB Ratnayake – Non –Executive Director 

The Audit Committee met three times during the period under review and four times since 1 

st 

April 2010 to 

th 

30 August 2010 and their scope of work has been detailed in the Corporate Governance report. 

The Attendance of the Audit Committee members is disclosed below for the period December 2009 to 31 

March 2010: 

Name of Director Position Attendance at Audit 

Committee Meetings 

Mr T N M Peiris Chairman of Audit 3/3 

Committee 

Mr A R Gunewardena Non-Executive Director 2/3 

Mr Y B Ratnayake Non-Executive Director 2/3 

st 

The Head of Finance, Head of Internal Audit and the External Auditors attend these meeting and the CEO 

attends these meetings by invitation. The External Auditors were present at every meeting and has done an 

assessment of the internal control systems and procedures. The committee has discussed the comments at 

these meetings. 

The Audit Committee is empowered to evaluate the adequacy and effectiveness of the accounting and internal 

control systems of the Company and monitor compliance with the statutory requirements. At these meetings, 

Audit Committee reviews the Quarterly and Annual financial statements of the Company prior to publication. 

During the year under review, the Audit committee also reviewed the performance of the Internal Audit 

Division and approved the InternalAudit program for the following financial year. 

The Audit Committee also examines the findings and recommendations of the internal audit Reports and 

ensures that corrective action is taken to overcome the noted deficiencies with a view of improving internal 

control and to mitigate business risk. The Audit Committee also looked into the resource requirement of the 

internal audit division and approved the recruitment of additional staff as requested by Head of InternalAudit. 

The Committee also reviewed the nature, approach and the scope of the external auditors and management 

letters issued and the actions taken by the Company on the issues raised. 

The Committee was of the view that the directors are held responsible for accuracy, reliability and 

completeness of the financial statements prepared and published by the Company and that they are in 

compliance with all statutory requirements 

The Audit Committee has recommended to the Board of Directors the re-appointment of Tudor V Perera & 

Co Chartered Accountants as auditors of the Company for the financial year 2010/2011. 


Sgd Mr T N M Peiris 

Chairman of Audit Committee 

th 

14 October 2010 


16

TELEGRAM: ASSETS, COLOMBO 

E-MAIL- tudorv@sltnet.lk 

I N D E P E N D E N T A U D I T O R S R E P O RT 

TUDOR V. PERERA & CO. 

CHARTERED ACCOUNTANTS 

TELEPHONE/FAX : 2431941 

: 2320639 

CEDRIC T. DE SILVA, F.C.A. (CONSULTANT) 

S.M.N.L. SENANAYAKE, B.Sc. (Pub.Admn.,) Dip.Mgt.,F.C.A. 

MRS. B.A.R.W. SENANAYAKE, F.C.A. 

M.T. LANTRA 

P.O. BOX 1177 

3RD FLOOR, DE MEL BUILDING, 

103, CHATHAM STREET, 

COLOMBO1 

INDEPENDENTAUDITORS' REPORTTO THE SHAREHOLDERS OFTHE FINANCE COMPANYPLC 

Report on Financial Statements 

We have audited the accompanying financial statements of The Finance Company PLC ("the company"), which comprise the 

balance sheet as at 31st March 2010, the income statement, statement of changes in equity, cash flow statement for the year then 

ended, and a summary of significant accounting policies and other explanatory notes. 

Management's Responsibility for the Financial Statements 

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka 

Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the 

preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; 

selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the 

circumstances. Management is also responsible to comply with the requirements of the Finance CompaniesAct No. 78 of 1988. 

Scope ofAudit and Basis of Opinion 

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in 

accordance with Sri LankaAuditing Standards. Those standards require that we plan and perform the audit to obtain reasonable 

assurance whether the financial statements are free from material misstatement. 

An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An 

audit also includes assessing the accounting principles used and significant estimates made by management, as well as 

evaluating the overall financial statement presentation. 

We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the 

purposes of our audit except for the matters referred to in (a), (b), (c) & (d) below. We therefore believe that our audit provides a 

reasonable basis for our opinion. 

a) The gross operating loss of the company during the year ended 31st March 2010 was Rs. 1,011,656,895/- and 

the company has incurred net losses of Rs.4,285,937,282/- and Rs.2,563,400,716/- after taxation, during the 

financial years ended 31st March 2010 and 31st March 2009 respectively. The liabilities have exceeded assets as 

at 31st March 2010 and that the net assets reflect a deficit of Rs.2,916,806,296/- as at that date. Also we draw 

attention to the shortfall of assets required to settle the deposit liabilities falling due for payment in 2010/2011, as 

set forth in Note 43 to these financial statements. These conditions, indicate the existence of a material uncertainty 

which may cast significant doubt about the company's ability to continue as a going concern. 

b) The company has not been able to comply with the directions issued by the Central Bank of Sri Lanka under 

the Finance CompaniesAct No: 78 of 1988 as disclosed in Note 42 to these financial Statements. 

c) We draw attention to Notes 38.2, 38.3 & 38.4 with regard to the pending appeals on Assessments of Income tax 

and settlement of outstanding taxes. 

d) Also, we draw attention to Note 7.2 & 7.3 with regard to the carrying amount of the Deferred Tax Asset as at 

the Balance Sheet date. 

Opinion 

In our opinion, except for the matters referred to in (a),(b),(c) & (d) above, so far as appears from our examination, the company 

maintained proper accounting records for the year ended 31st March 2010 and the financial statements give a true and fair view 

of the company's state of affairs as at 31st March 2010 and its loss and cash flows for the year then ended in accordance with Sri 

LankaAccounting Standards. 

Report on other Legal and Regulatory requirements 

In our opinion, except for as referred to in (b) & (c) above, these financial statements also comply with the requirements of 

Section 151 (2) of the CompaniesAct No. 7 of 2007 and the Finance CompaniesAct No. 78 of 1988. 

TUDOR V. PERERA& CO., 

CharteredAccountants. 

Date: 12th October 2010 


17

INCOME STATEMENT 

FOR THE YEAR ENDED 31.3.2010 31.3.2009 

Notes Rs. Rs. 

REVENUE 5,203,999,903 10,648,204,386 

Less: Revenue related Taxes - (7,726,354) 

NET REVENUE 5,203,999,903 10,640,478,032 

OPERATING INCOME 

Interest Income 1 3,804,053,010 6,697,488,248 

Interest Expenses 2 (4,815,709,905) (6,623,610,825) 

NET INTEREST INCOME/(EXPENSES) (1,011,656,895) 73,877,423 

Other Operating Income 3 256,633,867 664,209,760 

Other Income 4 221,051,744 246,857,271 

PROFIT/(LOSS) BEFORE OPERATING 

EXPENSES (533,971,284) 984,944,454 

OPERATING EXPENSES 

Personnel Cost (502,883,014) (770,017,735) 

VAT on Financial Services - (7,726,354) 

Employee Retirement Benefit Expenses 5 (75,608,308) (136,411,888) 

Administration and General Expenses (2,579,617,013) (1,999,146,205) 

PROFIT /(LOSS) BEFORE PROVISION FOR THE 

CREDIT LOSSES AND TAXATION 6 (3,692,079,619) (1,928,357,728) 

Provision for Loan Losses (593,857,663) (635,042,988) 

PROFIT / (LOSS) BEFORE TAXATION (4,285,937,282) (2,563,400,716) 

Income Tax 7 - - 

PROFIT / (LOSS) FOR THE YEAR (4,285,937,282) (2,563,400,716) 

Earnings/(Loss) per Share 8 (209.90) (125.54) 

Dividend per Share 9 - - 

The significant Accounting Policies and the Notes from pages 22 to 55 Form an integral part of these financial 

statements. 

The figures in brackets indicate deductions. 


18

BALANCE SHEET 

AS AT 31.3.2010 31.3.2009 

Notes Rs. Rs. 

ASSETS 

Cash in Hand and Balances with Banks 398,665,207 502,889,000 

Investments in Government Securities 10 - 954,863,929 

Investments in Deposits with Banks 31,619,603 39,312,771 

Investments in Dealing Securities 11 35,642,450 140,920 

Investments in Real Estate 12 4,634,406,716 5,183,525,517 

Investments in Housing Projects 2,134,383,989 1,158,900,353 

Investments in Hire Purchases 13 4,183,765,342 8,342,279,660 

Investments in Leases - Vehicles & Equipment 14.1 546,163,907 1,049,765,232 

Investments in Leases - Properties 14.2 773,154,139 954,717,856 

Easy Payments Loans on Lands 15 2,549,527,716 3,769,449,735 

Housing Loans 16 997,198,247 1,394,578,335 

Loans on Fixed Deposits 912,286,256 1,229,332,838 

Pawning 93,491,474 108,063,020 

Other Stocks 17 777,172,275 1,218,826,386 

Amount due from Customers 18 1,420,601,092 1,639,334,302 

Other Receivables 19 2,035,563,476 3,539,059,391 

Investment Properties 20 2,146,291,090 1,414,118,716 

Investments Securities 21 229,531,398 371,389,665 

Capital Work in Progress - Building 42,866,948 67,069,679 

Deferred Tax Asset 7.2 191,225,285 191,225,285 

Property, Plant & Equipment 22 3,321,337,773 3,575,708,805 

TOTAL ASSETS 27,454,894,383 36,704,551,395 

LIABILITIES 

Debentures 23 373,984,000 488,457,000 

Long Term Loans 24 765,758,557 987,639,271 

Public Deposits 25 25,747,254,728 27,065,133,232 

Interest Payable on Public Deposits 1,057,502,983 1,667,638,671 

Finance Leases 26 158,480,776 265,586,899 

Short term Loans 354,938,924 605,722,571 

Trade & Other Payables 27 1,248,211,314 2,150,624,234 

Current Tax Liability 28 - - 

Unclaimed Dividend 6,402,528 5,513,498 

Bank Overdrafts 659,166,869 1,990,230,118 

TOTAL LIABILITIES 30,371,700,679 35,226,545,494 

SHAREHOLDERS' FUNDS 

Stated Capital 29 410,180,756 410,180,756 

Capital Reserves 996,930,243 996,930,242 

Statutory Reserve Fund 30 659,910,000 659,910,000 

Revenue Reserves (4,983,827,295) (589,015,098) 

(2,916,806,296) 1,478,005,900 

TOTAL LIABILITIES & SHAREHOLDERS' FUNDS 27,454,894,383 36,704,551,395 

NET ASSETS PER SHARE 31 (142.85) 72.38 

I certify that the Financial Statements comply with the requirements of Companies Act No.07 of 2007. 

Sgd. 

Ruwan Wijeratne 

Head of Finance 

The Significant Accounting Policies and the Notes from pages 22 to 55 form an integral part of these financial statements. 

The Board of Directors is responsible for the preparation and presentation of these financial statements. 

The financial statements have been approved by the Board on 12th October 2010. 

Signed for and on behalf of the Board by: 

Sgd. 

Sgd. 

Sgd. 

Sgd. 

K.J. Yatawara 

Mrs N. C. Rupasinghe T.B. Ekanayake 

Mrs. V.W. Dissanayake 

Director/Chief Executive Officer Key Executive -Director Key Executive -Director Key Executive -Director 

Date: 12th October 2010. 


19

STATEMENT OF CHANGES IN EQUITY 

STATEMENT OF CHANGES IN EQUITY 

FOR THE YEAR ENDED Investment 

Securities Property 

Stated Revaluation Revaluation Other Reserve General Retained 

Capital Reserve Reserve Reserve Fund Reserve Earning Total 

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

Balance as at 1st April 2008 (as previously reported) 410,180,756 1,152,866 940,773,871 3,659,329 659,910,000 2,010,671,769 468,710 4,026,817,301 

Prior year adjustment - Provision for Financial VAT - - - - - - (108,874,914) (108,874,914) 

Balance as at 1st April 2008 (restated) 410,180,756 1,152,866 940,773,871 3,659,329 659,910,000 2,010,671,769 (108,406,204) 3,917,942,387 

Net Profit /(Loss) for the year - - - - - - (2,563,400,716) (2,563,400,716) 

Surplus on Revaluation of Property, Plant & Equipment - - 51,344,176 - - - - 51,344,176 

Dividend declared - (2007/2008) - - - - - (36,754,861) - (36,754,861) 

Balance as at 31st March 2009 410,180,756 1,152,866 992,118,047 3,659,329 659,910,000 1,973,916,908 (2,671,806,920) 1,369,130,986 

Balance as at 1st April 2009 410,180,756 1,152,866 992,118,047 3,659,329 659,910,000 1,973,916,908 (2,671,806,920) 1,369,130,986 

Net Profit / (Loss) for the year - - - - - - (4,285,937,282) (4,285,937,282) 

Balance as at 31st March 2010 410,180,756 1,152,866 992,118,047 3,659,329 659,910,000 1,973,916,908 (6,957,744,202) (2,916,806,296) 

The significant Accounting Policies and the Notes from pages 22 To 55 Form an integral part of these financial statements. 

Additional liability to financial VAT relating to 2006/2007 & 2007/2008 amounting to Rs.108.88 million has been adjusted against reserve as at 1st April 2008. 

The figures in brackets indicate deductions and negative variances. 


20

CASH FLOW STATEMENT 

FOR THE YEAR ENDED 31.3.2010 31.3.2009 

Rs. 

Rs. 

CASH FLOW FROM OPERATING ACTIVITIES 

Net Profit/(Loss) before Taxation (4,285,937,283) (2,563,400,716) 

Adjustments for: 

Dividend Received (7,454,062) (10,742,613) 

Interest paid on Borrowings 376,804,703 390,509,613 

Provision for fall in value of Investment Securities 92,231,260 133,858,826 

Provision for Doubtful Receivables of Related Companies 1,088,094,130 200,000,000 

Provision for Falling Value of Properties 417,300,000 - 

Provision for Loan Losses 593,857,663 635,042,988 

(Profit) / Loss on disposal of Investment Securities (138,985,368) (122,200,963) 

Depreciation 178,022,445 158,133,067 

(Profit)/Loss on sale of Property, Plant & Equipment (45,038,300) (42,293,705) 

2,554,832,471 1,342,307,213 

OPERATING PROFIT BEFORE CHANGES IN WORKING CAPITAL (1,731,104,812) (1,221,093,503) 

(Increase) / Decrease in Stocks - Lease 685,165,042 634,337,367 

(Increase) / Decrease in Stocks - Others 5,705,423,828 1,270,147,647 

(Increase) / Decrease in Amount due from Customers (375,124,453) (852,665,742) 

(Increase) / Decrease in Other Receivables 224,676,499 (992,442,835) 

(Increase) / Decrease in Investments in Dealing Securities (35,501,530) 415,415 

(Increase) / Decrease in Government Securities 954,863,929 2,784,800,611 

(Increase) / Decrease in Deposits with Bank 7,693,168 99,554,751 

Increase / (Decrease) in Public Deposits (1,317,878,504) (1,510,510,064) 

Increase / (Decrease) in Short-term Loans (250,783,646) (368,718,125) 

Increase / (Decrease) in Other Creditors (1,620,785,408) 88,201,005 

CASH GENERATED FROM OPERATIONS 2,246,644,113 (67,973,473) 

Less: Interest paid on Borrowings (376,804,701) (390,509,613) 

NET CASH FROM INVESTING ACTIVITIES 1,869,839,412 (458,483,086) 

Acquisition of Property, Plant & Equipment (29,932,565) (821,269,777) 

Proceeds from disposal of Property, Plant & Equipment 366,998,382 74,007,944 

Settlement of Finance Leases (107,106,123) (105,784,403) 

Acquisition/ Improvements of Investment Properties (732,172,374) (120,174,180) 

Purchase / Transfer of Investments Securities (10,000,000) (55,583,968) 

Proceeds from disposal of Investment Securities 198,112,376 152,136,846 

Dividend Received 7,454,062 10,742,613 

NET CASH USED IN INVESTING ACTIVITIES (306,646,242) (865,924,925) 

CASH FLOW FROM FINANCING ACTIVITIES 

Issue/ (Redemption) of Debentures (114,473,000) (26,020,000) 

Proceeds from Long term Loans - 551,200,000 

Settlement of Long term Loans (221,880,714) (730,673,982) 

Dividend Paid - (35,901,395) 

NET CASH GENERATED FROM FINANCING ACTIVITIES (336,353,714) (241,395,377) 

Net Increase/ (Decrease) in Cash and Cash Equivalents 1,226,839,456 (1,565,803,388) 

Cash & Cash Equivalent at Beginning of the year (1,487,341,118) 78,462,270 

Cash & Cash Equivalent at End of the year (260,501,662) (1,487,341,118) 

CASH & CASH EQUIVALENTS COMPRISE 

Cash & Balances with Banks 398,665,207 502,889,000 

Bank Overdrafts (659,166,869) (1,990,230,118) 

CASH & CASH EQUIVALENT AT END OF THE YEAR (260,501,662) (1,487,341,118) 

The significant Accounting Policies and the notes from pages 22 to 55 form an integral part of these financial statements. 


21

S I G N I F I C A N T A C C O U N T I N G P O L I C I E S 

1. GENERALINFORMATION 

The Finance Company PLC (“the Company”) is incorporated as a public shareholding company and domiciled in 

Sri Lanka. The Company's registered corporate office and principal place of business is located at No. 97, Hyde Park 

Corner, Colombo 02. 

The Company is a finance company registered under the Finance CompaniesAct No. 78 of 1988. 

The principal activity of the Company is providing financial services in Sri Lanka. During the year, the company 

was also engaged in land sales and property development. 

2. ADOPTION OFNEWAND REVISED SRI LANKA ACCOUNTING STANDARDS 

The company has adopted all new and revised Sri Lanka Accounting Standards (SLAS's) issued by the Institute of 

Chartered Accountants of Sri Lanka, which were relevant to its operations, and had become effective in the current 

financial year. 

At the date of authorization of these financial statements, the following standards and interpretations were in issue 

but not yet effective: 

* SLAS 44 Financial Instruments – Disclosures (effective for accounting periods beginning on or 

after 1 

st 

January 2011) ; and 

* SLAS 45 Financial Instruments – Recognition and Measurement (effective for accounting 

periods beginning on or after 1 

st 

January 2011) 

The company has not yet determined the potential impact of adopting SLAS 44 and 45,. However, due to its nature 

of operation, the directors believe that adoption of these two standards could have a significant impact on the 

financial statements. 

* SLAS 39 Share based payments - effective for period beginning on or after 1 

st 

January 2010, will 

be adopted for the financial year commencing from 1 

st 

April 2010. This standard 

requires an expenses to be recognized where an entity buys goods or services in 

exchange for shares or rights over shares (equity settled transactions), or in exchange for 

other assets equivalent in value to a given number of shares or rights over shares (cashsettled 

transactions) 

The Finance Company PLC is in the process of assessing the effects of adopting the aforesaid standard and the 

company policy would be determined accordingly. 

3. SIGNIFICANTACCOUNTING POLICIES 

3.1. Basis of preparation 

The financial statements have been prepared on the historical cost basis except for the revaluation of certain 

non-current assets. Assets and liabilities are grouped by nature and listed in an order that reflects their relative 

liquidity. 

3.2. Statement of compliance 

The financial statements have been prepared in accordance with Sri LankaAccounting Standards laid down by 

the Institute of CharteredAccountants of Sri Lanka and in compliance with the requirements of the Companies 

Act No. 7 of 2007 and the Finance CompaniesAct No. 78 of 1988 and amendments thereto. 

3.3. Comparative figures 

The accounting policies applied by the company are, unless otherwise stated, consistent with those used in the 

previous year. Previous year's figures and phrases have been re-arranged, wherever necessary, to conform to 

the current year's presentation. 


22


3.4. Taxation 

Income tax expense comprises of current and deferred income tax and social responsibility 

levy. 

3.4.1. Current Tax 

The tax currently payable is based on profit for the year as adjusted for taxation 

purposes in accordance with the provisions of the Inland RevenueAct No. 10 of 2006 

and amendments thereto. Taxable profit differs from profit as reported in the 

consolidated income statement because it excludes items of income or expense that 

are taxable or deductible in other years, and it further excludes items that are never 

taxable or deductible. The Company's liability for current tax is calculated using tax 

rates that have been enacted or substantively enacted by the balance sheet date. 

3.4.2. Deferred Taxation 

Deferred tax is recognize on differences between the carrying amounts of assets and 

liabilities in the financial statements and the corresponding tax bases used in the 

computation of taxable profit, and is accounted for using the balance sheet liability 

method. Deferred tax liabilities are generally recognized for all taxable temporary 

differences, and deferred tax assets are generally recognized for all deductible 

temporary differences to the extent that it is probable that taxable profits will be 

available against which those deductible temporary differences can be utilized. Such 

assets and liabilities are not recognized if the temporary differences arises from 

goodwill or from the initial recognition (other than in a business combination) of 

other assets and liabilities in a transaction that affects neither the taxable profit nor 

the accounting profit. 

The carrying amount of deferred tax assets is reviewed at each balance sheet date and 

reduced to the extent that it is no longer probable that sufficient taxable profits will be 

available to allow all or part of the asset to be recovered. 

Deferred tax assets and liabilities are measured at the tax rates that are expected to 

apply in the period in which the liability is settled or the asset realized, based on tax 

rates (and tax laws) that have been enacted or substantively enacted by the balance 

sheet date. The measurement of deferred tax liabilities and assets reflects the tax 

consequences that would follow from the manner in which the company expects, at 

the reporting date, to recover or settle the carrying amount of its assets and liabilities. 

Deferred tax assets and liabilities are offset when there is a legally enforceable right 

to set off current tax assets against current tax liabilities and when they relate to 

income taxes levied by the same taxation authority and the company intends to settle 

its current tax assets and liabilities on a net basis. 

3.5. ValueAdded Tax on Financial Services 

The Value Added Tax of 20% on financial services is charged in accordance with the 

provisions of the ValueAdded Tax (Amended )Act No. 13 of 2004 with effect from January 

2004 on the supply of financial services. The value addition comprises profit before tax of 

the company adjusted for book depreciation, prescribed components of the emoluments to 

the employees, and economic depreciation. 

3.6. ValueAdded Tax on Taxable Supplies 

Value Added Tax on taxable supplies is paid according to the provisions of the Value Added 

TaxAct No. 14 of 2002 and the amendments thereto. 


23


3.7. Imputation of Tax credit on interest income from Treasury Bills 

Interest income from treasury bills is grossed by the addition of tax credit imputed to 10% 

withholding tax on the income realized during the period under review. 

3.8. Foreign Currencies 

The financial statements of the company are presented in Sri Lanka Rupees, which is the 

company's functional currency. 

All transactions in currencies other than the functional currency are recorded in Sri Lanka 

Rupees, using the exchange rates prevailing at the time the transactions were effected. At 

each balance sheet date, monetary assets and liabilities denominated in foreign currencies 

are retranslated to Sri Lanka Rupee equivalents at the exchange rate prevailing on the 

balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies 

are not retranslated. Exchange differences arising on settlement of monetary items and 

retranslation of monetary items, are recognized in profit or loss in the year in which they 

arise. 

3.9. Borrowing Costs 

Borrowing costs directly attributable to the acquisition, construction, or production of 

qualifying assets, which are assets that necessarily take a substantial period of time to get 

ready for their intended use or sale, are added to the cost of those assets, until such time as the 

assets are substantially ready for their intended use of sale. 

Investment income earned on the temporary investment of specific borrowing pending their 

expenditure on qualifying assets is deducted from the borrowing costs eligible for 

capitalization. 

All other borrowing costs are recognized in profit or loss in the period in which they are 

incurred. 

4. ASSETSAND BASES OFTHEIR VALUATION 

4.1. Amounts due from customers (Loans andAdvances) 

Amounts due from customers are stated in the balance sheet net of provision for bad and 

doubtful loans. Interest is not accrued to revenue in the case of non-performing loans and 

advances. 

4.1.1. Provision for loan losses 

Specific provision for possible loan losses are made on the basis of continuous 

review of all advances to customers in accordance with Sri Lanka Accounting 

Standard No. 33 “Revenue Recognition and disclosures in the financial statements of 

Finance Companies”, and the requirement as stipulated by the Central Bank of Sri 

Lanka (Direction No. 3 of 2006) based on an aged classification of advances as 

shown below: 

Period outstanding 

Provision made 

Arrears within 6 to 11 months 50% 

Arrears – 12 months and over 100% 

In addition, as a matter of prudence, general provisions are made wherever necessary 

based on past experience and judgment, taking into account risks inherent in any 

portfolio. 

Provisions are applied to write off advances, in part or in whole, when loans are 

considered partly or wholly irrecoverable. 


24


4.2. Investment in Real Estate 

Investments in real estate are carried at cost or net realizable value whichever is lower. Cost 

of purchase, costs of conversion and other costs including selling and distribution expenses 

that are necessary to bring the asset to the saleable condition are included in the carrying 

value of the property. Net realizable value is price at which inventories can be sold in the 

ordinary course of business, less the estimated cost of completion and the estimated cost 

necessary to make the sale. 

4.3. Leasing 

Leases are classified as finance leases whenever the terms of the lease, substantially transfer 

all the risks and rewards of ownership to the lessee. All other leases are classified as 

operating leases. 

4.3.1. The Company as lessor 

Amounts due from lessees under finance leases are recorded as receivables at the 

amount of the company's net investment in the leases. 

Rental income from operating leases is recognized on a straight line basis over the 

term of the relevant lease. Initial direct cost incurred in negotiating and arranging and 

arranging operating leases are added to the carrying amount of the leased asset and 

recognized on a straight-line basis over the lease term. 

4.3.2. The Company as lessee 

Assets held under finance leases are initially recognized as assets of the company at 

their fair value at the inception of the lease or, if lower, at the present value of the 

minimum lease payments. The corresponding liability to the lessor is included in the 

balance sheet as a finance lease obligation. 

Lease payments are apportioned between finance charges and reduction of the lease 

obligation so as to achieve a constant rate of interest on the remaining balance of the 

liability. Finance charges are charged directly to profit or loss, unless they are 

directly attributable to qualifying assets, in which case they are capitalized in 

accordance with the company's general policy on borrowing costs. Contingent 

rentals are recognized as expenses in the periods in which they are incurred. 

Operating lease payments are recognized as expenses on a straight –line basis over 

the lease term, except where another systematic basis is more representative of the 

time pattern in which economic benefits from the leased asset are consumed. 

Contingent rentals arising under operating leases are recognize as an expense in the 

period in which they are incurred. 

In the event that lease incentives are received to enter into operating leases, such 

incentives are recognized as liabilities. The aggregate benefit of incentives is 

recognized as a reduction of rental expense on a straight-line basis, except where 

another systematic basis is more representative of the time pattern in which 

economic benefits from the leased asset are consumed. 


25


4.4. Investments 

4.4.1. Investment Property 

Investment property, which is property held to earn rentals and /or for capital 

appreciation, is measured initially at its costs, including transaction costs. 

Subsequent to initial recognition, investment property is measured at fair value. 

Gains and losses arising from changes in the fair value of investment property are 

included in profit or loss in the period in which they arise. The Board of Directors 

determines the fair value of the investment properties. 

4.4.2. Dealing Securities 

Dealing Securities are stated at lower of cost and market value determined on an 

aggregate portfolio basis. 

4.4.3. Investment Securities 

All quoted and unquoted securities, which are held on long-term and medium basis 

are valued at cost. The carrying amounts of long-term investments are reduced to 

recognize a decline, which is considered other than temporary, in the value of 

investments, determined on an individual investment basis. 

4.4.4. Investments in Government Securities 

Investments in Government Securities represent Sri Lanka Government Treasury 

Bills, Sri Lanka Government Securities and Central Bank of Sri Lanka Securities, 

which are accounted for, at cost plus a portion of discount/premium accrued thereon. 

4.5. Property, Plant & Equipment 

Land and buildings held for use in the supply of services, or for administrative purposes, are 

stated in the balance sheet at their revalued amounts, being the fair value at the date of 

revaluation, less any subsequent accumulated depreciation and subsequent accumulated 

impairment losses. 

Any revaluation increase arising on the revaluation of such land and buildings is credited in 

equity to the properties revaluation reserve, except to the extent that it reverses a revaluation 

decrease for the same asset previously recognized in profit or loss, in which case the 

increase is credited to profit or loss to the extent of the decrease previously charged. A 

decrease in the carrying amount arising on the revaluation of such land and buildings is 

charged to profit or loss to the extent that it exceeds the balance, if any, held in the properties 

revaluation reserve relating to a previous revaluation of that asset. 

Depreciation on revalued buildings is charged to profit or loss. On the subsequent sale or 

retirement of a revalued property, the attributable revaluation surplus remaining in the 

properties revaluation reserve is transferred directly to retained earnings. 

Properties in the course of construction for production, rental, or administrative purpose, or 

for purposes not yet determined, are carried at cost, less any recognized impairment loss. 

Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in 

accordance with the company's accounting policy. Depreciation of these assets, on the same 

basis as other property assets, commences when the assets are ready for their intended use. 

Fixtures and equipment are stated at cost less accumulated depreciation and accumulated 

impairment losses. 


26


4.5.1. Depreciation 

Depreciation is charged so as to write off the cost or valuation of assets, other 

than freehold land and properties under construction, over their estimated useful 

lives, using the diminishing balance method. The estimated useful lives, residual 

values, and depreciation method are reviewed at each year-end, with the effect of 

any changes in estimate is accounted for on a prospective basis. 

Assets held under finance leases are depreciated over their expected useful lives 

on the same basis as owned assets or, where shorter, the term of the relevant lease. 

No depreciation is charged on freehold lands. Depreciation is charged on all other 

property, plant and equipment including leased assets, on the reducing instalment 

basis consistent with that of the previous year and is calculated at the rates 

specified below. 

Freehold Buildings 

Furniture & Fittings 

Office Equipment 

Motor Vehicles 

2.5% p.a. 

10% p.a 

10% p.a. 

20% p.a. 

4.6. IntangibleAssets 

Intangible assets acquired separately are reported at cost less accumulated amortization and 

accumulated impairment losses. Amortization is charged on a straight-line basis over their 

estimated useful lives. The estimated useful life and amortization method are reviewed at 

the end of each annual reporting period, with the effect of any changes in estimate being 

accounted for on a prospective basis. 

4.7. OtherAssets 

Other assets are stated at amounts expected to be realized after making provisions for bad 

debts. 

4.8. Cash and Cash equivalents 

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, subject to 

insignificant risk of changes in value. 

For the purpose of the cash flow statement, cash and cash equivalents comprise cash in hand, 

deposits held at call with banks, and other demand deposits net of bank overdrafts. 

4.9. Impairment of tangible and intangible assets 

The company assesses at each reporting date, or more frequently if events or changes in 

circumstances indicate that the carrying value may be impaired, whether there is an 

indication that an asset may be impaired. If such indication exists, or when an annual 

impairment testing for an asset is required, the company makes an estimate of the asset's 

recoverable amount. If the recoverable amount of an asset is estimated to be less than its 

carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An 

impairment loss is recognized immediately in profit or loss, unless the relevant asset is 

carried at a revalued amount, in which case the impairment loss is treated as a revaluation 

decrease. 


27


5. LIABILITIES AND PROVISIONS 

5.1. Retirement benefit costs 

Contributions to defined contribution retirement benefit plans are recognized as expenses 

when employees have rendered service entitling them to the contributions. 

5.1.1. Defined Benefit Plan 

Provision has been made for retirement gratuities from the completion of the first 

year of service for all employees, in conformity with SLAS 16. However, under the 

Payment of Gratuity Act No. 12 of 1983, the liability to an employee arises only on 

completion of 5 years of continued service. 

An amount equivalent to the provision is invested in gratuity fund established 

outside the company. The actual gratuity payments are charged to the gratuity fund. 

The fund has been actuarially valued by professionally qualified actuaries once in 

three years. 

5.1.2. Defined Contribution Plan 

Employees are eligible for Employees' Provident Fund contribution and Employees' 

Trust Fund contributions in line with respective statues and regulations. The 

company contributes 15% and 3% of gross emoluments of employees to Employees' 

Provident Fund and Employees' Trust Fund respectively. 

5.1.3. Pension Plan 

All employees who would complete 10 or more years of service by the age of 55 

years have the option of contributing to the pension scheme where the company and 

the employees would contribute 5% each of the basic salary. 

Amount equivalent to the contribution for the year is invested in a pension fund 

established outside the company. 

5.2. Provisions 

Provisions are recognized when the company has a present obligation (legal or constructive) 

as a result of a past event, it is probable that the company will be required to settle the 

obligation, and a reliable estimate can be made of the amount of the obligation, 

The amount recognized a provision is the best estimate of the consideration required to 

settle the present obligation at the balance sheet date, taking into account the risks and 

uncertain surrounding the obligation . Where a provision is measured using the cash flows 

estimated to settle the present obligation, its carrying amount is the present value of those 

cash flows. 

When some or all of the economic Benefits required to settle a provision are expected to be 

recovered from a third party, the receivable is recognized as an asset if it is virtually certain 

that reimbursement will be received and the amount of the receivable can be measured 

reliably. 


28


6. REVENUE RECOGNITION 

6.1. Interest Income 

Interest income from loans and advances is recognized on an accrual basis. However, 

income recognition from loans and advances ceases when the account is overdue for six 

months or more, in compliance with direction No. 15 of 1991 (Accrued interest), and 

thereafter recognized on a cash basis. 

6.2. Land Sales Income 

Gross income of land sales represents the excess of sale value over the cost of land sold. Cost 

of land includes the purchase cost, development expenses, selling expenses, and borrowing 

cost up to the completion of developments. 

6.3. Profit on Lands sold under easy payment facility 

Profit on lands is recognized once the easy payment agreement is signed. 

6.4. Finance Lease Income 

Finance lease income constitute the excess of the total rental receivable from a lease 

agreement over the cost of the leased asset. Such income is credited to the income statement 

over the primary period of each lease so as to give a constant periodic rate of return on the 

company's net investment outstanding in the lease. 

6.5. Interest Income from Government Securities 

Interest income from Government of Sri Lanka Treasury Bills is recognized on a time 

proportion basis, and discounts on purchase are amortized to income on a straight –line basis 

over the investment periods through to maturity. 

6.6. Interest on Overdue rentals 

Interest from overdue rentals has been accounted for on a cash basis. 

6.7. Dividend Income 

Dividend income is recognized when the right to receive payments is established. 

6.8. Finance Charges 

Full credit is taken for finance charges received on hire purchase, lease contracts, and other 

facilities at the inception of the contracts. 

Income from all other interest bearing investments is recognized as revenue on an accrual 

basis. 

7. EXPENSES RECOGNITION 

Expenses are recognized 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 the income statement. 


29


8. SEGMENT INFORMATION 

8.1. Reporting Segment 

A segment is a distinguishable component of the company that is engaged in providing 

services (Business segment) or in providing services within a particular economic 

environment (Geographical Segment), which is subject to risks and rewards that are 

different from those of other segments. 

In accordance with the Sri Lanka Accounting Standards No. 28 “Segmental Reporting”, 

segmental information is presented in respect of the company. The segments comprise 

leasing, hire purchase, investment in fixed deposits with banks, investment in Government 

Securities, Real Estate, and other financing products. 

Segment results, assets and liabilities include items directly attributable to a segment as well 

as those that can be allocated on a reasonable basis. 

9. CRITICALACCOUNTING JUDGEMENTSAND KEYSOURCES OFESTIMATION 

UNCERTAINTY 

In the application of the company's accounting policies, which are described in Note 3 to 7, the 

directors are required to make judgments, estimates and assumptions about the carrying amounts 

of assets and liabilities that are not readily apparent from other sources. The estimates and 

associated assumptions are based on historical experience and other factors that are considered 

to be relevant.Actual results may differ from these estimates. 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to 

accounting estimates are recognized in the period in which the estimate is revised if the revision 

affects only that period, or in the period of the revision and future periods if the revision affects 

both current and future periods. 

9.1. Key Sources of Estimation Uncertainty 

The following are the key assumptions concerning the future, and other key sources of 

estimation uncertainty at the balance sheet date, that have a significant risk of causing a 

material adjustment to the carrying amounts of assets and liabilities within the next financial 

year. 

9.1.1. Profit on Lands sold under easy Payment Facility 

Profit on lands sold under easy payment facility is recognized once the easy payment 

agreement is signed. 

In making their judgment, the directors considered the detailed criteria for the 

recognition of revenue from the sale of goods set out in SLAS 29 “Revenue” and, in 

particular, whether the company had transferred to the buyer the significant risks and 

rewards of ownerships of the lands sold under the easy payment facility. Following 

the detailed quantification of the company's loan losses in respect of lands sold under 

easy payment, and the agreed limitation on the customer's ability to discontinue the 

loan facility, the directors are satisfied that the significant risks and rewards have 

been transferred and that recognition of the profit on lands sold under easy payment 

facility in the current year is appropriate. 

9.1.2. Fall in Value of Investment Securities 

The company treats all equity investments as impaired when there has been a 

significant or prolonged decline in the fair value below its cost or where other 

objective evidence of impairment exists. The determination of what is significant or 

'prolonged' requires judgment. 


30

NOTES TO THE FINANCIAL STATEMENTS 

FOR THE YEAR ENDED 31ST MARCH 2010 

2009/2010 2008/2009 

Rs. 

Rs. 

1. INTEREST INCOME 

Interest Income on Hire Purchase 1,805,339,487 2,872,339,511 

Earned Income from Leasing 163,698,559 291,393,239 

Land Sales on Easy Payment Terms 560,845,177 800,375,107 

Interest Income on Housing Loans 200,542,413 459,548,057 

Interest Income on Other Products 512,971,140 646,036,943 

Interest on Overdue Rentals 382,097,238 418,883,969 

Interest on Related Co. Lending 76,758,160 496,292,138 

Pawn Brokering 23,926,594 23,458,992 

Interest on Investments in Deposits with Banks 3,754,207 16,148,786 

Interest Income in Government Securities 74,120,035 673,011,506 

3,804,053,010 6,697,488,248 

2009/2010 2008/2009 

Rs. 

Rs. 

2. INTEREST EXPENSES 

Interest on Fixed Deposits & Certificate of Deposits 4,099,100,013 5,004,983,762 

Interest on Savings Deposit 146,404,725 216,525,721 

Interest on Debenture 67,827,141 76,245,843 

Interest on Bank Loans & Overdrafts 233,960,676 391,471,085 

Interest on Short-term Borrowings 92,924,977 271,085,926 

Interest on Related Co. Borrowings 125,563,615 652,521,295 

Other Interest Expenses 49,928,758 10,777,193 

4,815,709,905 6,623,610,825 

2009/2010 2008/2009 

Rs. 

Rs. 

3. OTHER OPERATING INCOME 

Income on Real Estate & Housing Projects 101,821,520 439,063,153 

Recovery of Bad Debts Written Off 32,553,550 56,032,534 

Finance Charges 5,470,759 57,190,145 

Fees & Commission Income 99,880,465 87,612,120 

Repossessed & Others 16,907,573 24,311,808 

256,633,867 664,209,760 

2009/2010 2008/2009 

Rs. 

Rs. 

4. OTHER INCOME 

Dividend Received 7,454,062 10,742,613 

Valuation Fees 8,600 1,390,850 

Profit on disposal of Property, Plant & Equipment 45,038,300 42,293,705 

Investment Properties - Rent Income - 24,047,172 

Profit on disposal of Investments Securities 157,684,566 121,907,393 

Sundries 10,866,216 46,475,538 

221,051,744 246,857,271 


31

NOTES TO THE FINANCIAL STATEMENTS (CONTD.) 

2009/2010 2008/2009 

Rs. 

Rs. 

5. EMPLOYEES' RETIREMENT BENEFIT EXPENSES 

Contributions to Staff Pension Scheme 2,906,226 15,097,994 

Contributions to Staff Gratuity Fund - 25,609,336 

Contributions to Provident Fund 60,471,316 79,753,798 

Contributions to Employees' Trust Fund 12,230,766 15,950,760 

75,608,308 136,411,888 

6. PROFIT BEFORE PROVISION FOR CREDIT 2009/2010 2008/2009 

LOSSES & TAXATION Rs. Rs. 

Profit/(Loss) before Provision for Credit Losses & Taxation 

has been arrived at after charging including the followings 

Directors' Emoluments 

Directors' Remuneration 8,240,020 53,098,678 

EPF & ETF on Directors' Remuneration 1,242,216 9,557,762 

Auditors' Remuneration 

Audit Fees 1,500,000 1,500,000 

Fees paid for Non Audit Services - - 

Provision for fall in value of Investment Securities 92,231,260 133,858,826 

Provision for Doubtful Receivables of Related Companies 1,186,767,938 200,000,000 

Provision for Investment in Dealing Securities 12,814,771 - 

Depreciation 178,022,315 158,133,067 

Charities & Donations - 9,294,477 

2009/2010 2008/2009 

Rs. 

Rs. 

7. INCOME TAX 

Current Income Tax Expense (Note 7.1) - - 

Deferred Tax (Note 7.2) - - 

- - 

Income tax on profits of the company has been computed at the rates as stipulated in the Inland 

Revenue Act No. 10 of 2006 and subsequent amendments thereto. 


32


7.1.Reconciliation of Accounting Profit/(Loss) with taxable income 

2009/2010 2008/2009 

Rs. 

Rs. 

Profit/(Loss) before tax (4,285,937,282) (2,563,400,716) 

Capital portion of Lease Rentals 362,693,761 779,526,438 

Disallowable Expenses 2,601,109,432 694,816,213 

Tax deductible Expenses (399,770,444) (669,117,235) 

Tax Exempt Income (209,433,874) (71,335,944) 

Taxable other Income (123,117,254) (77,348,125) 

Interest Claimed under Section 32 (44,074,913) (229,956,062) 

Taxable Income/(Loss) (2,098,530,574) (2,136,815,431) 

Income Tax Nil Nil 

Social Responsibility Levy Nil Nil 

Nil 

Nil 

Movement of Tax Losses 

Tax loss Brought forward (2,923,735,982) (786,920,551) 

Tax loss during the year (2,098,530,574) (2,136,815,431) 

Tax loss carried forward (5,022,266,556) (2,923,735,982) 

2009/2010 2008/2009 

7.2 Deferred Tax Asset Rs. Rs. 

Lease Stock - Vehicles (71,893,916) 15,639,242 

Lease Stock - Property - - 

Property Plant & Equipment (317,366,851) (399,686,857) 

Provision for fall in value of Investments 106,858,729 74,577,788 

Provision for Doubtful Receivables on Related Companies 485,368,778 70,000,000 

Provision for Loan Losses 575,888,730 365,716,787 

Assets purchased under Finance Leases (13,623,239) (36,242,167) 

General Provision - 3,082,400 

Unclaimed Tax Losses 1,023,307,594 275,422,193 

1,788,539,825 368,509,386 

Additional deferred tax asset not recognized (Note 7.3) (1,597,314,540) (177,284,101) 

191,225,285 191,225,285 

7.3 The above additional differed tax asset of Rs.1,597,314,540 for the year ended 31st March 2010 

(Rs.177,284,101/- as at 31st March 2009) has not been recognized because of the view that taxable 

profit will not be available in the foreseable future for which deductible temporary differences can 

be utilized other than Rs.191,225,285/- recognised as at 31st March 2008. 


33


8. EARNING/(LOSS) PER SHARE 

The calculation of basic earning/ (loss) per share is based on the profit / (loss) attributable to ordinary 

shareholders divided by the weighted average number of ordinary shares in issue during the year. 

2009/2010 2008/2009 

Profit/(Loss) attributable to ordinary shareholders (Rs) (4,285,937,282) (2,563,400,716) 

Weighted average No. of Shares 20,419,365 20,419,365 

Earning / (Loss) per share (Rs.) (209.90) (125.54) 

2009/2010 2008/2009 

9. DIVIDEND PER SHARE 

Gross Dividend paid/ payable to the shareholders (Rs.) Nil Nil 

No. of Shares 20,419,365 20,419,365 

Dividend per Share (Rs.) Nil Nil 

The Board of Directors has not recommended a dividend for the year ended 31st March 2010 

31.3.2010 31.3.2009 

10.INVESTMENTS IN GOVERNMENT SECURITIES Rs. Rs. 

Treasury Bills - 1,016,156,157 

Interest in Suspense on Treasury Bills - (61,292,228) 

- 954,863,929 


34


31.3.2010 31.3.2009 

No. of Book Market Book Market 

11. INVESTMENTS IN DEALING Shares Value Value Value Value 

SECURITIES Rs. Rs. Rs. Rs. 

Bank, Finance & Insurance Sector 

CTC Eagle Insurance Co. PLC 450 2,240 92,700 2,240 49,838 

National Development Bank PLC 15 2,475 3,150 2,475 1,337 

Commercial Bank PLC 100 13,500 20,200 13,500 7,925 

Arpico Finance PLC 100 5,500 6,450 5,500 3,300 

Hatton National Bank PLC 12 1,332 2,256 1,332 936 

First Capital 275,900 26,178,859 16,347,075 - - 

26,203,906 16,471,831 25,047 63,336 

Beverages, Food & Tobacco Sector 

Ceylon Brewery PLC 200 3,900 36,100 3,900 10,200 

John Keels Holdings PLC 155 13,640 28,520 13,640 9,726 

17,540 64,620 17,540 19,926 

Chemicals & Pharmaceuticals Sector 

Chemical Industries (Colombo) PLC 21 5,220 1,428 5,220 662 

Chemical Industries (Colombo) 16 380 696 380 328 

Laxapana Batteries PLC 100,000 590,046 525,000 - - 

Haycarb PLC 12,000 2,509,112 1,911,000 - - 

3,104,758 2,438,124 5,600 990 

Construction & Engineering Sector 

Dipped Products PLC 67 5,327 6,951 5,327 3,702 

Colombo Land PLC 50 200 375 200 195 

Central Industries PLC 50 5,700 11,000 5,700 3,750 

11,227 18,326 11,227 7,647 

Diversified Sector 

Cey Theatres 22,200 1,269,665 1,198,800 - - 

1,269,665 1,198,800 - - 

Footwear & Textile Sector 

Bata Shoe Co. of Ceylon PLC (delisted) 1,000 8,000 - 8,000 - 

Pugoda Textile Lanka PLC (delisted) 2,250 10,125 - 10,125 - 

18,125 - 18,125 - 


35


31.3.2010 31.3.2009 

No. of Book Market Book Market 

11. INVESTMENTS IN DEALING Shares Value Value Value Value 

SECURITIES … contd .. Rs. Rs. Rs. Rs. 

Investment in Trust Sector 

Environmental Resources Investment 

PLC 15,400 2,583,566 1,035,650 - - 

2,583,566 1,035,650 - - 

Hospital Sector 

Durdans Hospital 47,100 3,618,042 3,202,800 - - 

3,618,042 3,202,800 - - 

Hotel & Travel Sector 

Pegasus Reef 39,800 1,825,197 1,761,150 - - 

Serandib Hotels (NV) 15,400 855,773 850,850 - - 

John Keels Hotels 28,766 287,660 287,660 - - 

Hotel Services 75 1,547 1,744 - - 

2,970,177 2,901,404 - - 

Land & Property 

City Housing 52,900 1,070,961 1,005,100 - - 

East West 199,600 2,667,532 2,694,600 - - 

3,738,493 3,699,700 - - 

Manufacturing Sector 

Ceylon Oxygen PLC (Delisted) 325 15,600 - 15,600 - 

Raigam Wayamba Salter 1,000,000 2,500,000 2,500,000 - - 

Lanka Tiles PLC 21 284 1,911 284 599 

Royal Ceramics PLC 20 23,704 2,260 23,704 550 

2,539,588 2,504,171 39,588 1,149 

Plantation Sector 

Watawala Plantations PLC 2,000 21,500 352,000 21,500 117,000 

Udapussellawa Plantations PLC 300 2,250 - 2,250 12,150 

23,750 352,000 23,750 129,150 

Trading Sector 

Singer (Sri Lanka) PLC 4 44 300 44 129 

C.W. Mackie 55,900 2,358,340 2,180,100 - - 

2,358,384 2,180,400 44 129 

Carrying Amount 48,457,221 36,067,826 140,921 222,327 

Less: Provision for fall in Value 12,814,771 

35,642,450 


36


12. INVESTMENT IN REAL ESTATE 

Investment in Real Estate includes an amount of Rs.1,055,223,216.28 of which the transfer of 

ownership of the company is restricted due to placement of a caveat by a third party. 

31.3.2010 31.3.2009 

13. INVESTMENTS IN HIRE PURCHASE Rs. Rs. 

Receivable within 1 year from Balance Sheet date 2,227,701,272 3,336,121,880 

Receivable between 1 & 5 years from Balance Sheet date 1,939,089,630 4,973,426,453 

Receivable after 5 years from Balance Sheet date 16,974,440 32,731,327 

4,183,765,342 8,342,279,660 

Stock outstanding in respect of Non -performing Hire 

Purchase Contracts 406,066,668 489,775,369 

14. INVESTMENTS IN LEASES 31.3.2010 31.3.2009 

14.1. Investments in Leases - Vehicles & Equipment Rs. Rs. 

Total Lease Rentals Receivable 699,058,173 1,335,208,781 

Less: Lease Rentals Receivable after 1 year (330,567,195) (726,532,153) 

Lease Rentals Receivable within 1 year 368,490,978 608,676,628 

Less: Unearned Lease Income on above (90,555,125) (168,315,364) 

Net Lease Rentals Receivable on above 277,935,853 440,361,264 

Lease Rentals Receivable between 1 to 5 years 307,884,066 697,171,026 


Net Lease Rentals receivable on above 245,699,751 580,072,638 

Lease Rentals Receivable after 5 years 22,683,129 29,361,127 

Less: Unearned lease income on above (154,826) (29,797) 


Total Net Lease Rentals Receivable 546,163,907 1,049,765,232 

Stock outstanding in respect of Non -performing Lease 

Contracts 99,227,901 416,316,772 

31.3.2010 31.3.2009 

14.2. Investments in Leases - Properties Rs. Rs. 

Total Lease Rentals Receivable 1,325,332,113 1,624,259,613 

Less: Lease Rentals Receivable after 1 year (1,049,920,280) (1,370,085,435) 

Lease Rentals Receivable within 1 year 275,411,833 254,174,178 



Lease Rentals Receivable between 1 to 5 years 842,103,523 903,425,164 


Net Lease Rentals receivable on above 452,021,962 416,563,599 

Lease Rentals Receivable after 5 years 207,866,756 466,660,272 

Less: Unearned lease income on above (3,773,873) (6,021,632) 


Total Net Lease Rentals Receivable 773,154,139 954,717,856 

Stock outstanding in respect of Non -performing Lease 

Contracts 411,228,963 416,316,772 


37


31.3.2010 31.3.2009 

Rs. 

Rs. 

15. EASY PAYMENT LOANS ON LANDS 

Receivable within 1 year from Balance Sheet date 723,880,978 1,296,156,685 

Receivable between 1 & 5 years from Balance Sheet date 1,300,885,920 1,709,210,188 


2,549,527,716 3,769,449,735 

Stock outstanding in respect of Non -performing Easy 

Payment Loans on Lands 671,281,123 369,277,145 

31.3.2010 31.3.2009 

16. HOUSING LOANS Rs. Rs. 

Receivable within 1 year from Balance Sheet date 192,521,811 207,925,706 

Receivable between 1 & 5 years from Balance Sheet date 623,568,793 784,482,090 


997,198,247 1,394,578,335 

Stock outstanding in respect of Non -performing 

Housing Loans 528,185,266 397,776,502 

31.3.2010 31.3.2009 

17. OTHER STOCKS Rs. Rs. 

Receivable within 1 year from Balance Sheet date 341,746,770 373,190,389 

Receivable between 1 & 5 years from Balance Sheet date 400,907,583 807,956,940 


777,172,275 1,218,826,386 

31.3.2010 31.3.2009 

17.1. Other stocks comprise of; Rs. Rs. 

Agreement to Sell 3,836,625 4,005,296 

Education Loan 172,408,003 277,532,445 

Stock in Trade 448,914 448,914 

Land Finance 121,282,612 208,290,730 

Agro Products 276,962,429 425,038,984 

Sundry Trading Stock 76,301,603 101,516,541 

Service Financing 75,964,882 99,185,534 

Rakshana Warama 49,967,207 102,807,942 

Total 777,172,275 1,218,826,386 

Stock outstanding in respect of Non-performing other 

contracts 204,115,439 124,281,455 


38


31.3.2010 31.3.2009 

Rs. 

Rs. 

18. AMOUNTS DUE FROM CUSTOMERS 

Hire Purchases 998,306,623 1,002,383,039 

Leasing 209,802,316 212,847,598 

Personal Loans 110,307,198 105,132,332 

Pawning 7,593,466 16,486,008 

Other Loans 653,827,222 441,887,587 

Housing Loans 327,625,965 215,396,249 

Rakshana Warama Loans 13,478,481 23,816,431 

Service Financing 77,873,954 51,628,055 

Lease Purchases 317,942 302,942 

Land Easy Payments 807,690,791 601,494,877 

Repossessed Contracts 733,136,231 525,368,656 

3,939,960,189 3,196,743,774 

Less: Interest in Suspense (873,962,726) (491,526,011) 

Provision for Loan Losses (Note 18.1) (1,645,396,371) (1,065,883,461) 

1,420,601,092 1,639,334,302 

31.3.2010 31.3.2009 

Rs. 

Rs. 

18.1. Provision for Loan Losses 

Balance at the end of the year 1,645,396,371 1,065,883,462 

Movement in the Loan Loss provision 

Balance on account at beginning of the year 1,065,883,462 430,840,474 

Transfer during the year (14,344,753) - 

Add: Provision made during the year 593,857,662 635,042,987 

1,645,396,371 1,065,883,461 

31.3.2010 31.3.2009 

Rs. 

Rs. 

19. OTHER RECEIVABLES 

Receivable within 1 year from Balance Sheet date 937,574,869 2,868,666,329 

Receivable between 1 & 5 years from Balance Sheet date 1,097,988,607 670,393,062 

Receivable after 5 years from Balance Sheet date - - 

2,035,563,476 3,539,059,391 


39


31.3.2010 31.3.2009 

Rs. 

Rs. 

19.1. Other Receivables comprise of; 

Deposits & Prepayments 208,255,427 345,779,636 

Staff Loans 66,490,934 106,582,265 

Interest Receivable on Fixed Deposits 6,926,587 4,118,601 

Lease Rentals paid in Advance 7,442,094 11,689,552 

Economic Service Charges 147,633,875 123,252,874 

Advance Corporate Tax (ACT) 29,574,795 29,574,795 

Related Company Receivables 1,097,988,608 2,462,373,234 

Sundry Debtors 471,251,156 455,688,434 

Total 2,035,563,476 3,539,059,391 

31.3.2010 31.3.2009 

Rs. 

Rs. 

19.2. Related Company Receivable 

Gross Receivable 2,820,386,052 - 

Less: Balances in the interest in Suspense Account (335,629,506) - 

Balance before provision for Doubtful Receivables 2,484,756,546 2,662,373,234 

Less: Provision for Doubtful Receivable (1,386,767,938) (200,000,000) 


31.3.2010 31.3.2009 

20. INVESTMENT PROPERTIES Rs. Rs. 

At fair Value 

Balance at the beginning of the year 1,414,118,716 1,293,944,536 

Additions through subsequent Expenditure/Transfer 732,172,374 120,174,180 

Net Gain from fair Value Adjustments - - 

Reclassified as Loans - - 

2,146,291,090 1,414,118,716 

Land and buildings (Investment Properties) owned by the company were revalued by the Directors 

of the Company. The Company considers the change in the fair value to be more significant than 

their depreciation, and therefore would revalue periodically on a systematic basis for disclosure purposes. 


40


21 INVESTMENTS SECURITIES 

In Unquoted Company Shares No. of % of Nominal 

Cost/ Valuation 

Ceylinco Group Companies Shares Holding Value 31.03.2010 31.03.2009 

Rs. Rs. Rs. 

San Michele Ltd. 35,682 28.48 3,568,200 3,602,097 3,602,097 

Ceylinco Tourist Hotels Ltd. 197,750 19.96 19,775,000 33,373,242 33,373,242 

Ceylinco Tourist Hotels Ltd. (Non voting shares) 25,000 - 2,500,000 2,500,000 2,500,000 

Ceylinco Ltd. 12,154 11.06 121,540 245,277 245,277 

Middleway Ltd. Ord. Shares 3,571,002 29.42 35,710,020 35,563,848 35,563,848 

Middleway Ltd. Pre.. Shares 2,950,000 - 29,500,000 29,379,247 29,379,247 

Ceylinco Hairdresers Ltd. 1,000 25.63 10,000 1,009 1,009 

Ceylinco Universal Ltd. 600,010 24.90 6,000,100 6,000,100 6,000,100 

Ceylinco Mgt. & Acc. Services Ltd. 320,000 20.00 3,200,000 5,812,480 5,812,480 

Golden Key Credit Card Company Ltd. 500 0.02 5,000 630,000 630,000 

Ceylinco Hotels Ltd. Ord. Shares 25,000 10.61 250,000 250,000 250,000 

Ceylinco Hotels Ltd. Pre.. Shares 610,000 - 6,100,000 6,100,000 6,100,000 

Ceylinco Hotels Ltd. (Ordinary Non Voting shares) 475,000 - 4,750,000 4,750,000 4,750,000 

Ceylinco Venture Capital Co. Ltd. 1,640,000 35.09 16,400,000 6,030,000 6,030,000 

Knowle ((Pvt.) Ltd. - 8% non Cum. Pre. Shares 5,000 35.71 500,000 500,000 500,000 

The Finance & Guarantee Co. Ltd. 48,643 4.09 4,864,300 4,864,300 4,864,300 

Seilaani Ltd. 48,000 24.00 4,800,000 4,799,999 4,799,999 

Green Agro Lanka (Pvt). Ltd.- Class A 369,200 15.70 3,692,000 2,713,141 2,713,141 

Green Agro Lanka (Pvt). Ltd.- Class B 66,550 - 665,500 1,644,359 1,644,359 

Ceylinco Investment & Reality (Pvt.) Ltd. 1,300,000 4.38 13,000,000 1,000,000 1,000,000 

Ceylinco International Trading Co. Ltd. 41,667 6.76 416,667 500,000 500,000 

Ceylinco Homes International Ltd. 850,000 21.05 8,500,000 10,000,000 10,000,000 

Ceyhomes Credit & Investment Ltd. 1,000,000 30.30 10,000,000 10,000,000 10,000,000 

Ceylinco Shriram Capital Management Ser. Co. Ltd. 550,000 27.50 5,500,000 1,069,438 1,069,438 

Asian Finance Co. PLC 75,000 2.54 750,000 750,000 750,000 

Ceylinco Development Bank Ltd. - - - 

Ceylinco Capital Investment Co. (Pvt.) Ltd. 182,000 12.88 1,820,000 168,887 168,887 

Ceylinco Savings Bank Ltd. 1,510,833 6.59 15,108,330 15,108,330 15,108,330 

Ceylinco Stock Brokers (Pvt.) Ltd. 23,800 0.58 238,000 500,000 500,000 

Ceycom - Global Communication Co. Ltd 1,000,000 8.95 10,000,000 5,000,000 5,000,000 

Ceylinco Pensions (Private) Ltd. 24,999 50.00 249,990 250,000 250,000 

Ceylinco Leasing Corporation Ltd. 2,785,714 0.43 2,785,714 1,411,110 1,411,110 

Cey-Energy Electronics Co. (Pvt) Ltd. 1,475,871 12.72 14,758,710 38,042,804 38,042,804 

Cey-Energy Electronics Co. (Pvt) Ltd. Pre.Shares 600,000 - 6,000,000 15,465,906 15,465,906 

Ceylinco International Reality (Pvt). Ltd. 300,000 29.97 3,000,000 3,000,000 3,000,000 

Ceylinco Building Society Ltd. (Units) 8,000,000 21.89 80,000,000 6,000,000 6,000,000 

Ceylinco Worldwide Trading (Pvt) Ltd 61,750 0.60 6,175,000 6,175,000 6,175,000 

Ceylinco Prosperity (Pvt) Ltd 50,000 23.47 500,000 500,000 500,000 

Ceylinco Grameen Credit Co. Ltd. 5,000 2.41 50,000 1,200,000 1,200,000 

E Ceylinco . Com (Pvt.) Ltd. 50,000 34.40 500,000 750,000 750,000 

Ceylinco PLC Technology (Pvt.) Ltd. 1,000,000 37.45 10,000,000 9,125,000 9,125,000 

Ceylinco Developers Ltd. 200,000 2.02 2,000,000 2,000,000 2,000,000 

Independent Financial News & Views (Pvt.) Ltd.(ARATUWA) 4,900 16.54 49,000 49,000 49,000 

Ceylinco Fashion Trend Limited 100,000 21.28 1,000,000 1,000,000 1,000,000 

International College of Business & Technology Ltd 50,000 2.03 500,000 500,000 500,000 

American Education Centre Ltd 1,000,000 25.00 10,000,000 5,000,000 5,000,000 

Ceylinco Profit Sharing Investment Corp.Ltd. 100,000 13.77 1,000,000 1,000,000 1,000,000 

Ceylinco Foliage Exports (Pvt) Ltd 550,000 5.12 5,500,000 3,500,000 3,500,000 

Ceylinco Niranjan Invention (Pvt.) Ltd. 48,999 12.89 489,990 500,000 500,000 

Ceylinco Travels & Tours Ltd. 250,000 10.87 2,500,000 2,500,000 2,500,000 

Ceylinco Vocational Taining Pvt.Ltd. 120,000 25.00 1,200,000 1,482,000 1,482,000 

Ceylinco Financial & Consultancy Co.(Pvt).Ltd. 150,000 30.00 1,500,000 1,500,000 1,500,000 

Ceylinco Tax & Financial Consultants-Non Voting Shares 10,335,000 - 103,350,000 99,050,000 99,050,000 

Ceylinco Employees Sports Complex (Pvt) Ltd 200,000 25.00 2,000,000 2,000,000 2,000,000 

Seraka Investments Ltd. 655,000 15.82 6,550,000 5,300,000 5,300,000 


41


21 INVESTMENTS SECURITIES (contd.) 

In Unquoted Company Shares No. of % of Nominal 



Rs. Rs. Rs. 

Ceylinco Express (Pvt) Ltd) - - - 

Ceylinco Swiftcare (Pvt) Ltd 100,000 12.37 1,000,000 1,000,000 1,000,000 

Ceylinco Seylan Housing & Commercial Properties Ltd 101,080 6.32 1,010,800 200,000 200,000 

Ceylinco Capital Ltd. 250,000 27.53 2,500,000 2,500,000 2,500,000 

The Sitar (Pvt) Ltd 200,000 20.00 2,000,000 2,000,000 2,000,000 

The Sitar (Pvt) Ltd (Ordinary Non Voting Shares) 400,000 - 4,000,000 4,000,000 4,000,000 

International Consultancy & Corporate Services (Pvt) Ltd 20,000 4.94 1,000,000 1,000,000 1,000,000 

Asian Investment & Factoring (Pvt) Ltd (Non voting) 75,000 - 750,000 750,000 750,000 

F & G Real Consultant & Brokers (Pvt) Ltd (Non Voting) 20,000 - 200,000 200,000 200,000 

Ceylinco Cisco Ranaviru Services (Pvt) Ltd 50,000 10.95 500,000 500,000 500,000 

Ceylinco NetAssist (Pvt) Ltd 50,000 19.51 500,000 500,000 500,000 

TFC Homes Pvt Ltd 1,040,000 99.00 400,000 400,000 400,000 

IC & CS Software Solutions (Pvt) Ltd 25,000 9.43 250,000 250,000 250,000 

Finance House Consortium (Pvt) Ltd 20,000 - 200,000 200,000 200,000 

Ceylinco Renewables (Pvt) Ltd 180,492 39.00 1,804,920 1,804,920 1,804,920 

TFC Agro (Pvt) Ltd 1,755,000 39.00 3,900,000 3,900,000 3,900,000 

The Finance Property Fund (Ltd) ( Non Voting) 40,000 - 400,000 400,000 400,000 

Ceywin Telemedical Services (Pvt) Ltd 500,000 16.67 5,000,000 5,000,000 5,000,000 

Ceylinco Coloured Stones (Pvt) Ltd 800,000 9.52 8,000,000 8,000,000 8,000,000 

Tropical Foliage Ltd 150,000 3.95 1,500,000 1,500,000 1,500,000 

Ceylinco Bio Tech Ltd 150,000 4.54 1,500,000 1,500,000 1,500,000 

South Asian Travels Ltd (Ordinary Non voting Shares) 500,000 - 5,000,000 5,000,000 5,000,000 

Ceylinco Freight International (Pvt) Ltd (Non Voting) 400,000 - 4,000,000 4,000,000 4,000,000 

Ceylinco CISCO Cash Management & Transit Company (Pvt) Ltd 50,000 16.13 500,000 500,000 500,000 

Ceylinco Pharmaceuticals Ltd 600,000 35.29 6,000,000 6,000,000 6,000,000 

Ceylinco Design & Project Management Co. (Pvt) Ltd 500,000 22.48 5,000,000 5,000,000 5,000,000 

Ceylinco Cellular Company (Pvt) Ltd 100,000 12.42 1,000,000 1,000,000 1,000,000 

Premiums (Pvt) Ltd 100 7.94 10,000 10,000 10,000 

Other Companies 

Credit Information Bureau 2,978 - 297,800 297,800 297,800 

CKN Fund Management 300,000 - 3,000,000 3,000,000 3,000,000 

460,569,294 460,569,294 

In Quoted Company Shares No. of % of Nominal 



Rs. Rs. Rs. 

Blue Dia. Jew. World Wide Co. PLC 1,909,234 3.23 19,092,340 4,612,093 4,612,093 

Ceylinco Insurance Co.PLC 45 0.00 450 16,537 47,112,155 

Ceylinco Housing & Real Estate Co. PLC 3,298,950 24.66 32,989,500 21,584,473 22,264,561 

Seylan Bank PLC 1,473,223 1.18 14,732,230 24,842,515 26,693,815 

Ceylinco Finance PLC(Former CS & FS) 516,000 1.16 5,160,000 5,600,000 5,600,000 

Seylan Merchant Bank PLC 606,666 1.36 6,066,660 4,500,000 4,500,000 

Ceylinco Seylan Development Co. PLC 102,000 0.14 1,020,000 13,117,142 13,117,142 

74,272,759 123,899,765 

534,842,053 584,469,059 

Provision for Fall in Value - (305,310,655) (213,079,394) 

Total - Investment Securities net of provision for fall in value 229,531,398 371,389,665 

Quoted Company Shares -Cost 74,272,759 123,899,765 

Quoted Company Shares -Market Value 89,277,944 254,587,724 


42


22. PROPERTY, PLANT & EQUIPMENT 

Cost / Valuation Freehold Leasehold 

Land Buildings Furniture & Office Motor Land Buildings Motor Total 

Fittings Equipment Vehicles Vehicles 

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

Balance at the beginning of the year 1,459,365,740 1,002,374,278 111,963,057 755,331,641 263,947,459 49,000,000 40,873,453 426,319,612 4,109,175,240 

Addition during the year - 52,500,788 3,038,448 11,043,329 - - - 3,350,000 69,932,565 

Revaluation Surplus - - - - - - - - - 

Transfers from Leasehold to Freehold - - - - 185,786,821 - - (185,786,821) - 

1,459,365,740 1,054,875,066 115,001,505 766,374,970 449,734,280 49,000,000 40,873,453 243,882,791 4,179,107,805 

Disposals during the year - - 2,816,321 8,463,077 262,789,434 - - - 274,068,832 

Balance at the end of the year 1,459,365,740 1,054,875,066 112,185,184 757,911,893 186,944,846 49,000,000 40,873,453 243,882,791 3,905,038,973 

Land Buildings Furniture & Office Motor Land Buildings Motor Total 

Fittings Equipment Vehicles Vehicles 

Accumulated Depreciation Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. 

Balance at the beginning of the year - 51,074,453 35,226,828 210,810,410 122,287,769 - 2,018,127 112,048,849 533,466,436 

Depreciation for the year - 23,782,495 7,632,644 54,445,755 28,275,191 - 971,383 62,914,853 178,022,321 

Transfers from Leasehold to Freehold - - - - 86,810,007 - - (86,810,007) - 

- 74,856,948 42,859,472 265,256,165 237,372,967 - 2,989,510 88,153,695 711,488,757 

Disposals during the year - - 872,526 2,148,290 124,766,741 - - - 127,787,557 

Balance at the end of the year - 74,856,948 41,986,946 263,107,875 112,606,226 - 2,989,510 88,153,695 583,701,200 

Carrying amount as at 31.3.2010 1,459,365,740 980,018,118 70,198,238 494,804,018 74,338,620 49,000,000 37,883,943 155,729,096 3,321,337,773 

Carrying amount as at 31.3.2009 1,459,365,740 951,299,824 76,736,229 544,521,231 141,659,691 49,000,000 38,855,327 314,270,763 3,575,708,805 


43


31.3.2010 31.3.2009 

Rs. 

Rs. 

23. DEBENTURES 

Payable within 1 year from Balance Sheet date 14,225,000 128,698,000 

Payable between 1 and 5 years from Balance Sheet date 359,759,000 359,759,000 

Payable after 5 years from Balance Sheet date - - 

373,984,000 488,457,000 

Movement during the year 

Balance at the beginning of the year 488,457,000 514,477,000 

Add: Issues during the year - - 

Less: Redemptions during the year (114,473,000) (26,020,000) 

Balance at the end of the year 373,984,000 488,457,000 

Interest 

No. of 

Type of Debentures Type Rates debentures Value (Rs.) 

Issue 4 I 11.25% 13,550 1,355,000 

II 12.50% 103,500 10,350,000 

III 13.50% 25,200 2,520,000 

Issue 5 II 14.00% 104,100 10,410,000 

III 14.00% 2,012,000 201,200,000 

IV 21.25% 1,481,490 148,149,000 

373,984,000 

31.3.2010 31.3.2009 

24. LONG-TERM LOANS Rs. Rs. 

Payable within 1 year from Balance Sheet date 244,570,545 651,439,577 

Payable between 1 and 5 years from Balance Sheet date 273,502,064 230,763,495 

Payable after 5 years from Balance Sheet date 247,685,948 105,436,199 

765,758,557 987,639,271 

Movement during the year 

Balance at the beginning of the year 987,639,271 1,167,113,253 

Add: Obtained during the year - 551,200,000 

Less: Repayments made during the year (221,880,714) (730,673,982) 



44


31.3.2010 31.3.2009 

Rs. 

Rs. 

25. PUBLIC DEPOSITS 

Payable within 1 year from Balance Sheet date 20,557,573,503 22,384,167,827 

Payable between 1 and 5 years from Balance Sheet date 5,189,681,225 4,680,965,405 


25,747,254,728 27,065,133,232 

Public Deposits comprise of ; 

Fixed Deposits - NQY (Interest Payable - at Maturity) 12,530,932,247 16,551,919,556 

Fixed Deposits - TERM (Interest Payable - Monthly) 11,760,357,951 8,719,686,443 

Certificate of Deposits (Note 25.1) 275,489,819 327,095,020 

Savings Deposits 1,179,707,261 1,465,757,138 

Other Deposits 767,450 675,075 


31.3.2010 31.3.2009 

25.1 Certificate of Deposits Rs. Rs. 

Certificate of Deposits - Face Value 290,400,000 354,500,000 

Less: Interest in Suspense (14,910,181) (27,404,980) 

275,489,819 327,095,020 

31.3.2010 31.3.2009 

Rs. 

Rs. 

26. FINANCE LEASES 

Total Lease Rentals Payable 197,404,318 369,135,947 

Less: Lease Rentals Payable after 1 year - (210,157,255) 

Lease Rentals Payable within 1 year 197,404,318 158,978,692 

Less: Unamortized Financial Charges on above (38,923,542) (42,307,710) 

Net Lease Rentals Payable on above 158,480,776 116,670,982 

Lease Rentals Payable between 1 to 5 years - 210,157,255 

Less: Unamortized Finance Charges on above - (61,241,338) 

Net Lease Rentals Payable on above - 148,915,917 

Lease Rentals Payable after 5 years - - 

Less: Unamortized Finance Charges on above - - 

Net Lease Rentals Payable on above - - 

Total Net Lease Rentals Payable 158,480,776 265,586,899 


45


31.3.2010 31.3.2009 

Rs. 

Rs. 

27. TRADE AND OTHER PAYABLES 

Payable within 1 year from Balance Sheet date 1,248,211,314 2,150,624,234 

Payable between 1 and 5 years from Balance Sheet date - - 


1,248,211,314 2,150,624,234 

Trade and Other Payables Comprise of; 

Staff Security Deposits 999,928 1,002,003 

Value Added Tax Payable 120,272,501 86,134,963 

Accrued Expenses and Other Charges 668,524,340 662,217,438 

Payable to Suppliers 60,917,681 40,750,431 

Related Company Payables 69,085,000 1,114,490,991 

Advances Received on Land Sales 118,335,929 120,472,014 

Interest Payable on Debentures & Long-term Loans 210,075,935 125,556,394 

1,248,211,314 2,150,624,234 

31.3.2010 31.3.2009 

Rs. 

Rs. 

28. CURRENT TAX LIABILITIES 

Balance at the beginning of the year - 51,850,674 

Current year Income Tax Provision - - 

Less: Economic Service Charge - (51,850,674) 

Balance at the end of the year - - 

31.3.2010 31.3.2009 

Rs. 

Rs. 

29. STATED CAPITAL 

Issued and Fully paid Share Capital 410,180,756 410,180,756 

31.3.2010 31.3.2009 

The Stated Capital Comprises of: Rs. Rs. 

17,966,232 Issued and Fully paid Ordinary Shares 179,662,320 179,662,320 

2,453,133 Issued and Fully paid Worker Shares 24,531,330 24,531,330 

Share Premium 205,987,106 205,987,106 

410,180,756 410,180,756 


46


30. STATUTORY RESERVE FUND 

In accordance with the direction No. 1 of 2003 (Capital Funds) issued by the Central Bank of Sri Lanka, 

licensed finance companies have to maintain a reserve fund. If the Capital Funds of the company less 

than 25% of the total deposit liability and not less than 10% thereof, the company required to transfer 

not less than 20% of the net profit for the year to the said reserve fund. If the capital funds of the 

company less than 10% of the total deposit liability, the company is required to transfer not less than 

50% of the net profit for the year to the said reserve fund. 

31.3.2010 31.3.2009 

Rs. 

Rs. 

Deposits Liability 25,747,254,728 27,065,133,232 

Capital Funds (2,916,806,296) 1,478,005,900 

Capital Funds to Deposit Liability (%) (11.32%) 5.46% 

Net Profit /(Loss) for the year (4,285,937,283) (2,563,400,716) 

Percentage required as per Direction No. 1 of 2003 50.00% 50.00% 

Amount required to be transferred to Statutory Reserve Fund - - 

Amount transferred during the year to Statutory Reserve Fund - - 

Balance at the beginning of the year 659,910,000 659,910,000 


31. NET ASSETS PER SHARE 

The Net Assets Value per share is based on the total Net Assets at the year end divided by the number 

of ordinary shares outstanding during the year and calculated as follows: 

31.3.2010 31.3.2009 

Total Net Assets at the year end (Rs.) (2,916,806,296) 1,478,005,900 

Number of Ordinary Shares outstanding at the year end 20,419,365 20,419,365 

Net Asset per Share (Rs.) (142.85) 72.38 


47


32. MATURITY ANALYSIS Less than Between Between More than Total as at Total as at 

1 year 1 to 3 years 3 to 5 years 5 years 31.3.2010 31.3.2009 

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

Interest Earning Assets 

Investments in Government Securities - - - - - 954,863,929 

Investments in Deposits with Banks 31,619,603 - - - 31,619,603 39,312,771 

Investments in Hire Purchase 2,227,701,272 1,803,006,080 136,083,550 16,974,440 4,183,765,342 8,342,279,660 

Investment in Leases 394,975,147 419,877,777 277,843,936 226,621,186 1,319,318,046 2,004,483,088 

Easy Payments Loans on Lands 723,880,978 784,801,212 516,084,708 524,760,818 2,549,527,716 3,769,449,735 

Housing Loans 192,521,811 362,111,264 261,457,529 181,107,643 997,198,247 1,394,578,335 

Loans on Fixed Deposits 912,286,256 - - - 912,286,256 1,229,332,838 

Related Company Lending 1,097,988,608 - - - 1,097,988,608 2,462,373,234 

Other Loans and Advances 1,855,839,336 235,563,831 165,343,752 34,517,922 2,291,264,841 2,966,223,708 

7,436,813,011 3,605,360,164 1,356,813,475 983,982,009 13,382,968,659 23,162,897,298 

Non Interest Earning Assets 

Cash in Hand 11,365,052 - - - 11,365,052 17,914,747 

Balance with Banks 387,300,155 - - - 387,300,155 484,974,252 

Investments in Share Market 35,642,450 - - - 35,642,450 140,920 

Investments in Real Estate 4,634,406,716 - - - 4,634,406,716 5,183,525,517 

Housing Projects 2,134,383,989 - - - 2,134,383,989 1,158,900,353 

Other Receivables 937,574,869 - - - 937,574,869 1,076,686,157 

Investment Properties - - - 2,146,291,090 2,146,291,090 1,414,118,716 

Investment Securities - - - 229,531,398 229,531,398 371,389,665 

Deferred Tax Assets - 47,806,321 47,806,321 95,612,643 191,225,285 191,225,285 

Property, Plant & Equipment - - - 3,321,337,773 3,321,337,773 3,575,708,805 

Capital Working Progress - - - 42,866,948 42,866,948 67,069,679 

8,140,673,231 47,806,321 47,806,321 5,835,639,852 14,071,925,725 13,541,654,096 

Total Assets 15,577,486,242 3,653,166,485 1,404,619,796 6,819,621,861 27,454,894,384 36,704,551,394 

Percentage 56.75% 13.31% 5.12% 24.84% 100.00% 100.00% 

Interest Bearing Liabilities 

Debentures 14,225,000 359,759,000 - - 373,984,000 488,457,000 

Long-term Loans 244,570,545 273,502,064 - 247,685,947 765,758,556 987,639,271 

Public Deposits 20,557,573,503 3,594,118,412 1,254,721,828 340,840,985 25,747,254,728 27,065,133,232 

Lease Creditors 158,480,776 - - - 158,480,776 265,586,899 

Related Company Payables 69,085,000 - - - 69,085,000 1,114,490,991 

Short-term Borrowings 285,853,925 - - - 285,853,925 605,722,572 

Bank Overdrafts 659,166,869 - - - 659,166,869 1,990,230,118 

21,988,955,618 4,227,379,476 1,254,721,828 588,526,932 28,059,583,854 32,517,260,083 

Non Interest Bearing Liabilities 

Interest Payable on Public Deposits 1,057,502,983 1,057,502,983 1,667,638,671 

Trade and Other Payables 1,248,211,315 - - - 1,248,211,315 1,036,133,243 

Unclaimed Dividend 6,402,528 - - - 6,402,528 5,513,498 

Shareholders' Funds - - - (2,916,806,296) (2,916,806,296) 1,478,005,900 

2,312,116,826 - - (2,916,806,296) (604,689,470) 4,187,291,312 

Total Liabilities 24,301,072,444 4,227,379,476 1,254,721,828 (2,328,279,364) 27,454,894,384 36,704,551,395 

Percentage 88.38% 15.37% 4.56% (8.31%) 100.00% 100.00% 


48


Year 

Year 

2009/2010 2008/2009 

33. FINANCIAL REPORTING BY SEGMENT Rs. % Rs. % 

Assets 

Leasing 1,319,318,046 7.48 1,049,765,232 4.13 

Hire Purchase 4,183,765,342 23.73 8,342,279,660 32.84 

Investments in Fixed Deposits with Banks 31,619,603 0.18 39,312,771 0.15 

Investments in Government Securities - - 954,863,929 3.76 

Other Financing Products 5,329,675,969 30.23 8,674,968,170 34.15 

Real Estate 6,768,790,705 38.39 6,342,425,870 24.97 

Total 17,633,169,665 100.00 25,403,615,632 100.00 

Gross Income 

Leasing 163,698,559 4.28 291,393,239 4.68 

Hire Purchase 1,805,339,487 47.15 2,872,339,511 46.17 

Investments in Fixed Deposits with Banks 3,754,207 0.10 16,148,786 0.26 

Investments in Government Securities 74,120,035 1.94 673,011,506 10.82 

Other Financing Products 1,680,382,563 43.88 1,929,419,099 31.01 

Real Estate 101,821,520 2.65 439,063,153 7.06 

Total 3,829,116,371 100.00 6,221,375,294 100.00 

34. BANK LOANS AND OVERDRAFTS 

Bank loans and Overdrafts are secured partly by land and buildings and real estate projects 

of the company. 

Assets pledged as security for the facilities obtained by the Company 

Nature of Facility Amount Utilized Nature of Assets 

Term Loans 2.90 million Housing Loan portfolio amount to Rs.143 Mn. 

Term Loans 304.06 million Freehold Land & Building amounts to Rs.706.85 Mn. 

Term Loans 214.90 million Real Estate Projects amounts to Rs.385 Mn. 

Term Loans 116.19 million No Mortgage - Credit line from Central Bank 

Term Loans 123.31 million - 

Permanent Overdrafts 9.60 million Fixed Deposit amounting to Rs.17.42 Mn. 

Freehold Land & Building amounts to Rs.287.53 Mn. 

Permanent Overdrafts 262.50 million Lease portfolio amounting to Rs.19.70 Mn & 

Real Estate Projects amounts to Rs.3.00 Mn. 

35. REVALUATION OF PROPERTY, PLANT & EQUIPMENT 

The Company has revalued its freehold land and buildings as at 31st March 2008 by professionally 

qualified and independent valuers M/s. A.Y. Daniel & Sons Incorporated valuers of, No. 6, Chitra Lane, 

Kirula Road, Colombo 5, by applying the capitalisation and contractor basis. 


49


36 RELATED PARTY TRANSACTIONS 

Transactions with the Related Parties in the ordinary course of business carried out on an arm's length basis. 

1. Transactions with Key Management Personnel (KMP) 

Key management personnel are persons who have authority and responsibility directly or indirectly for planning, 

directing and controlling the activities of the company. 

The key management personnel comprise of the Board of Directors of the reporting entity. 

1.1. The compensation of KMPs (Remuneration) 

The compensation to key management personnel of the company are disclosed in note 6 to the financial 

statement. 

1.2. There are no long-term post-employment, terminal benefits and share-based payments made to the 

Directors during the year. 

1.3. No loans were given to Key Management Personnel during the year. 

1.4. The shareholding of the Key management personnel together with their close family members are disclosed 

on page 09 Annual report of the Board of Directors 

1.5. The names of the Directors of the Company, who are also Directors of other companies are given in page 

09 Annual report of the Board of Directors. 

2. Transactions with Close Family Members 

Close family members are those who may be expected to influence or be influenced in their dealings with the 

company. 

There were no transactions with the close family members during the year. 

3. Dealing with Subsidiaries, Associates and Joint Venture : Not applicable 

3.1. The outstanding balances with related parties : Not applicable 

3.2. The guarantees and letter of credit taken by the company : None 

3.3. The company does not have an identifiable parent of its own. 

As per the Directions issued by the Monitory Board under Section 10 (1) of the Finance Companies Act No. 

78 of 1988 the Central Bank of Sri Lanka has appointed four Key Executive Directors, namely K J Yatawara, 

Mrs N C Rupasinghe, Mrs V W Dissanayake and T B Ekanayake to manage the operations of the Company, with 

effect from 6th March 2009. 

Deshamanya Dr. J.L.B. Kotelawala, Mrs. P.K. Karunanayake, S.R. Wijesinghe, K.A.S. Jayatissa, T.N.M. Peiris 

Y.B. Ratnayake, A.R. Gunawardena and Ms. M. Sabaratnam were made Non-Executive Directors with effect 

from 6th March 2009. 


50


36 RELATED PARTY TRANSACTIONS Contd….. 

The Directors of the Company are also the directors of the following companies. The Company has entered 

into the following transactions during the financial year. 

Name of Company Names of Directors Nature of Transactions 

Ceylinco CISCO J.L.B. Kotelawala Security services obtained amounting 

Security 

Corporation (Pvt) Ltd 

S.R. Wijesinghe 

to Rs. 17.70 Mn. 

Ceylinco Insurance PLC A.R. Gunawardena Insurance premium paid amounting 

T.N.M. Peiris 

to Rs. 18.24 Mn. 

Receipt of agency insurance commission 

amounting to Rs. 25.75 Mn. 

Ceylinco Tax & Financial K.A.S. Jayatissa Tax consultancy services obtained 

Consultancy (Pvt) Ltd 

amounting to Rs. 0.64 Mn. 

Ceylinco Printing & J.L.B. Kotelawala Printing services obtained amounting 

Stationery (Pvt) Ltd S.R. Wijesinghe to Rs. 2.81 Mn. 

T.N.M. Peiris 

Ceylinco Takaful 

Insurance 

J.L.B. Kotelawala 

K.A.S. Jayatissa 

Insurance premium paid amounting 

to Rs. 1.89 Mn. 

The Finance Property Fund 

Company Ltd. 

J.L.B. Kotelawala 


Received assets and liabilities as follows: 

Mrs. N.C. Rupasinghe Assets Rs. (Mn) 

Mrs. V.W. Dissanayake Housing Project 1,005.70 

S.R. Wijesinghe Land Project 28.50 

T.N.M. Peiris Investment Property 732.17 

Y.B. Ratnayake Total Assets 1,766.37 

A.R. Gunawardena 

Ms. M.Sabaratnam 

Liabilities 

TFC Homes (Pvt) Ltd J.L.B. Kotelawala Bank Loan 242.23 

Mrs.P.K. Karunanayake Deposit Liabilities 1,588.10 

S.R. Wijesinghe Total Liabilities 1,830.33 


Ms. M.Sabaratnam 

Mrs. N.C. Rupasinghe 

Loan granted amounting to Rs. 5.00 Mn 

at 22% per annum for the TFC Homes 

(Pvt) Ltd. 


51


36 RELATED PARTY TRANSACTIONS Contd …….. 

With the approval of the Monitory Board of the Central Bank of Sri Lanka ,The Finance Company PLC, took over identified 

assets and liabilities of TFC Homes (Pvt) Ltd and The Finance Property Fund Company Ltd., during the financial year 

ended 31st March 2010. 

Assets 

Rs. (million) 

Housing Projects 1,005.70 

Land Projects 28.50 

Investment Properties 732.17 

Total assets taken over 1,766.37 

Liabilities 

Bank Loans 242.23 

Fixed Deposit Liabilities 1,588.10 

Total liabilities taken over 1,830.33 

37 EVENT OCCURRING AFTER THE BALANCE SHEET DATE 

There are no material transactions which took place during the period up to the date of signing the Auditor's Report which 

require adjustments to or disclosure in the financial statements, other than those disclosed in Note 39. 

38 COMMITMENTS AND CONTINGENT LIABILITIES 

38.1 Litigation against the Company 

In the opinion of the Directors, litigations if any which currently are against the Company, are related to the normal course 

of business and will not have a significant impact on the reported financial results or future operations of the Company. 

38.2. Assessments against Income Taxes 

The Department of Inland Revenue has issued following assessments and the Company has made appeals of 

which the outcomes are pending. However, the liability can't be ascertained due to pending status of the appeals. 

Year of Assessment Income Tax & Penalty Assessment (Rs) 

2005/06 302,818,095 

2006/07 688,409,322 

2007/08 468,324,620 

38.3. Economic Service Charge 

The following taxes are in arrears as at the Balance Sheet date. 

Year of Assessment Economic Service Charge (Rs.) 

2008/2009 15,000,000 

2009/2010 55,229,916 

38.4. In addition to the above, the arrears in Value Added Tax, VAT on Financial Services, Nation Building Tax and 

Stamp Duty are being settled on agreement with the Department of Inland Revenue and liabilities of those have 

been provided in the Financial Statements. 

39 GOING CONCERN ASSUMPTION 

The Directors resolved in November 2009 to continue the operations despite the significant loss of capital by the 

Company and this was approved at the Shareholders' meeting which was held in this regard in December 2009. 

In October 2010, as directed by the Central Bank of Sri Lanka, the Directors have decided to recapitalize the company 

by issuing 40 million voting shares at Rs.40/- per share. Also they have decided to issue 100 million non voting shares 

at Rs.20/- per share to depositors of the company as at 21st September 2010. 

In the opinion of the Directors these issues of shares together with the future plans of the company indicate that the 

company will have the ability to continue in operation for the foreseeable future. 


52


31.3.2010 31.3.2009 

Rs. 

Rs. 

40. RETIREMENT BENEFIT OBLIGATION 

40.1.Gratuity Trust Fund Balance 563,825,443 560,196,191 

Company's contribution to the Gratuity Fund for the year Nil 25,609,336 

The actuarial valuation of the above fund is Rs.303,338,029/- as at 31st March 2010 (most recent valuation) 

The valuation was carried out by professionally qualified actuaries, M/s. Actuarial & Management Co. (Pvt) Ltd. 

The valuation method used by the actuaries for the value the fund is the "Projected Unit method", the 

benchmark method recommended in SLAS 16 (Revised 2006) 

The principal assumption used in the valuation are as follows: 

* Mortality - A 67/70 Mortality Table 

* Gross Interest Rate - 11% 

* Salary escalation rate - 7.50% 

* Withdrawal rate - Age upto 49 - 18% and thereafter zero 

* Taxes - 20% of the investment income 

2009/2010 2008/2009 

40.2.Contribution to Pension Fund Rs. Rs. 

Annual Contribution 2,809,045 15,097,994 

41. CAPITALIZATION OF BORROWING COST 

The Company capitalized its borrowing cost on land projects at the rate of 20% p.a amounting to Rs.42,498,711/- 

(Rs.469,486,395 for the year 2008/2009) 


53


42. The Company has been unable to comply with the following directions issued by the Central Bank 

of Sri Lanka under the provisions of the Finance Companies Act No. 78 of 1988. 

Direction No. 1 of 2003 

a) Every finance company shall maintain capital funds which shall not at anytime be less than 

ten (10) percent of the total deposit liabilities. The company's capital funds to total deposit 

liabilities as at 31st March 2010 was negative 11.32% 

b)A sum equal to not less than 50% of the profit should be transferred to the Reserve Fund 

where the capital funds are less than 10% of the deposit liabilities. As the company has 

incurred a net loss of Rs.4,285,937,283/- no transfer has been made during the year 

under review, which is more fully described in note 30 to the financial statements. 


a) Every finance company shall maintain a minimum holding of liquid assets equal to 10% of the 

time deposits and certificates of deposits and 15% of the savings deposits whereas the 

liquid assets of the company as at 31st March 2010, was Rs.398,665,207/- against the 

requirement of Rs. 2,633,710,835/- 

b)Every finance company shall maintain assets in the form of Sri Lanka Government Treasury 

Bills, Sri Lanka Government Securities and Central Bank of Sri Lanka Securities equivalents 

to seven and half (7.5) percent of the average its month end total deposits liabilities of the twelve 

months of the preceding financial year, but the balance in above securities were Nil as at 31st March 2010. 


Every finance company is required to maintain a minimum core capital ratio of 5% and a 

minimum total risk weighted capital ratio of 10% whereas the reference ratios of the company 

were negative 18.01% and negative 18.25% respectively as at 31st March 2010. 


54


43. QUICK ASSETS VS. CURRENT DEPOSIT AND DEBT LIABILITIES 

Receivable within one year 

Rs. 

Hire Purchases 2,227,701,272 

Vehicle & Equipment 368,490,978 

Properties 277,935,853 

Easy Payment Loans & Lands 117,039,294 

Housing Loans 192,521,811 

Other Stocks 341,746,770 

Cash & Bank Balances 430,581,810 

3,956,017,788 

Payables within one year 

Debentures 14,225,000 

Long Term Loans 244,570,545 

Public Deposits 20,557,573,503 

20,816,369,048 

Shortfall (16,860,351,260) 

In the opinion of the Directors more than 80% of the public deposits placed 

for a term of one year or less are renewed for a further term. 


55

S H A R E H O L D E R I N F O R M AT I O N 

a) Shareholder Analysis 

31 ST MARCH 2010 31 ST MARCH 2009 

VALUE BANDS No of Total holding % No of Total holding % 

holders 

holders 

1-1,000 shares 9,076 1,535,658 8.55 9,001 1,417,303 7.89 

1,001- 10,000 

776 2,622,695 14.60 466 1,352,860 7.53 

10,001– 100,000 shares 134 3,493,787 19.44 80 1,920,222 10.69 

100,001– 1,000,000 

05 1,032,962 5.75 09 3,768,317 20.97 

shares 

Over 1,000,001shares 03 9,281,130 51.66 02 9,507,530 52.92 

Total 9,994 17,966,232 100.00 9,558 17,966,232 100.00 

Resident /Non-Resident as at 31 st March 2010 

VALUE 

BANDS 

No of 

holders 

Resident Non-Resident Total 

Total 

holding 

% No of 

holders 

Total 

holding 

% No of 

holders 

Total 

holding 

% 

1-1,000 shares 9041 1,525,795 8.49 35 9,863 0.06 9,076 1,535,658 8.55 

1,001-10,000 

shares 

10,001 – 

100,000 shares 

100,001 – 

1,000,000 

shares 

Over 

1000001shares 

761 2,569,195 14.30 15 53,500 0.30 776 2,622,695 14.60 

131 3,428,767 19.08 03 65,020 0.36 134 3,493,787 19.44 

05 1,032,962 5.75 -- -- -- 05 1,032,962 5.75 

02 7,782,630 43.32 01 1,498,500 8.34 03 9,281,130 51.66 

Total 9,940 16,339,349 90.94 54 1,626,883 9.06 9,994 17,966,232 100.00 

Individuals/Institutions 

TYPE 

No of 

holders 

31st March 2010 

No of 

shares 

% No of 

holders 

31st March 2009 

No of 

shares 

Company 120 10,531,476 58.62 118 12,108,083 67.39 

Individuals 9,874 7,434,756 41.38 9,440 5,858,149 32.61 

Total 9,994 17,966,232 100.00 9,558 17,966,232 100.00 

% 


56

S H A R E H O L D E R I N F O R M AT I O N ( C O N T D . ) 

b)Twenty Major Shareholders 

Name of Shareholder 31 st March 2010 31 st March 2009 

No of Shares % No of Shares % 

Ceylinco Investment Company Ltd 6,670,230 37.13 6,670,230 37.13 

Pershing LLC S/A Averbach Grauson and C o 1,498,500 8.34 2,837,300 15.79 

Prime Lands (Pvt) Ltd 1,112,400 6.19 NIL -- 

Desh Dr J L B Kotelawala 526,427 2.93 526,427 2.93 

Mrs Y S H I K Silva 162,000 0.90 162,000 0.90 

Seylan Bank PLC/M M C Fernando 125,000 0.70 NIL -- 

Seylan Bank PLC No 1 A/c 110,160 0.61 110,160 0.61 

Ceylinco Limited 109,375 0.61 109,375 0.61 

Mrs S Sukirtha 100,000 0.56 NIL -- 

Mr J S Unantenne 100,000 0.56 NIL -- 

Mr E Thavagnanasundaram 99,900 0.56 NIL -- 

S & L Investments (Pvt) Limited 85,944 0.48 85,944 0.48 

Mr E Thavagnanasooriyam 84,700 0.47 NIL -- 

DPMC Financial Services (Pvt) Ltd 

72,700 0.39 NIL -- 

Account No 2 

DPMC Financial Services (Pvt) Ltd 

70,500 0.39 NIL -- 

Account No 1 

Mr S M Mashoor 67,600 0.38 120 -- 

Ceylinco Capital Investment Company (Pvt) Ltd 63,760 0.35 63,760 0.35 

Mr M D H Mannapperuma 62,000 0.35 38,000 0.21 

Mr W A S P De Saram 55,320 0.31 200 -- 

Mr T G Perera 54,788 0.30 54,788 0.30 


57

T E N Y E A R S U M M A RY 

Rs. '000 

BALANCE SHEET - AS AT 31-Mar-01 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-05 31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10 

Assets 

Bank and Cash Balances 98,970 226,064 208,709 213,748 401,379 593,844 896,559 868,260 502,889 398,665 

Inv. In T/Bills & FD's 1,106,626 1,320,696 1,583,491 1,811,581 1,957,626 2,389,436 2,702,192 3,878,532 994,177 31,620 

Dealing Securities 11,915 4,928 4,855 5,814 7,034 2,312 2,312 556 141 35,642 

Inv. Real Estate & Housing 519,849 1,467,933 1,934,405 1,822,602 2,113,603 2,957,778 3,351,647 5,766,999 6,342,426 6,768,791 

Loans & Advance 2,996,484 3,481,145 4,182,152 6,037,784 8,980,375 12,427,849 16,989,565 18,913,435 17,017,248 10,286,595 

Investment in Leases 1,767,931 2,055,465 3,395,947 3,828,518 3,047,557 2,605,626 2,138,855 1,633,490 1,049,765 546,164 

Amount due from Customers 678,449 819,208 1,084,647 1,020,816 953,177 662,493 1,202,545 1,421,712 1,639,334 1,420,601 

Other Receivable 534,966 528,321 649,687 605,460 721,824 1,044,200 1,095,171 2,755,560 3,539,059 2,035,563 

Investments Securities 341,571 368,100 374,521 384,052 390,966 398,966 436,751 479,600 371,390 229,531 

Investment Properties - - - - 290,397 437,286 774,353 1,293,945 1,414,119 2,146,291 

Capital Work in Progress 6,726 7,060 26,647 6,470 - - 62,934 58,127 67,070 42,867 

Deferred Tax Assets - - - - - - - 191,225 191,225 191,225 

Property, Plant and Equipment 836,233 870,918 1,070,472 1,226,355 1,311,750 1,563,516 1,861,807 2,892,942 3,575,709 3,321,338 

Total Assets 8,899,720 11,149,838 14,515,535 16,963,200 20,175,688 25,083,306 31,474,690 40,154,383 36,704,551 27,454,894 

Liabilities 

Debentures - 167,220 269,609 511,433 533,494 286,893 533,564 514,477 488,457 373,984 

Long-term Loans 63,389 105,602 617,737 592,735 778,550 1,640,158 1,269,430 1,167,113 987,639 765,759 

Public Deposits 6,863,215 8,541,876 10,170,871 11,661,049 13,486,676 17,190,235 21,824,382 28,575,643 27,065,133 25,747,255 

Creditors 887,161 1,196,363 1,733,664 2,333,439 3,022,178 3,288,395 4,123,113 5,024,024 4,689,572 2,819,134 

Taxation 600 65 65 65 65 20,065 95,065 51,851 - - 

Unclaimed Dividend 931 1,723 2,147 2,437 2,842 3,301 3,943 4,660 5,513 6,403 

Bank Overdraft 91,278 178,057 427,651 451,074 719,958 473,837 718,973 789,798 1,990,230 659,167 

Total Liabilities 7,906,574 10,190,906 13,221,744 15,552,232 18,543,763 22,902,884 28,568,470 36,127,566 35,226,545 30,371,701 

Shareholders' funds 

Stated Capital 299,466 299,466 410,181 410,181 410,181 410,181 410,181 410,181 410,181 410,181 

Capital Reserves 258,185 258,185 458,020 458,020 458,020 450,853 450,853 945,586 996,930 996,930 

Statutory Reserve Fund 141,260 154,360 168,960 192,260 242,760 359,760 527,310 659,910 659,910 659,910 

Revenue Reserves 297,535 249,121 257,730 350,507 520,964 959,628 1,517,876 2,011,140 (589,015) (4,983,827) 

Less: Deferred Revenue Expenses (3,300) (2,200) (1,100) - - - - - - - 

993,146 958,932 1,293,791 1,410,968 1,631,925 2,180,422 2,906,220 4,026,817 1,478,006 (2,916,806) 

Total Liabilities & Shareholders fund 8,899,720 11,149,838 14,515,535 16,963,200 20,175,688 25,083,306 31,474,690 40,154,383 36,704,551 27,454,894 

Net Assets Value per Share (Rs.) 87.55 84.53 63.36 69.10 79.92 106.78 142.33 197.21 72.38 (142.85) 

INCOME STATEMENT 

For the year 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2007/08 2008/09 

TURNOVER - net 2,653,732 3,166,901 3,821,696 5,904,717 7,136,045 7,888,689 10,986,561 11,306,845 10,640,478 5,204,000 

Interest Income 1,525,551 1,533,282 1,879,483 2,137,571 2,498,964 3,436,473 4,513,473 5,721,382 6,697,488 3,804,053 

Interest Expenses (1,052,794) (1,305,487) (1,601,872) (1,735,674) (1,804,115) (2,071,173) (2,744,422) (4,251,079) (6,623,611) (4,815,710) 

Net Interest Income 472,757 227,795 277,611 401,897 694,849 1,365,300 1,769,052 1,470,303 73,877 (1,011,657) 

Other Operating Income 244,136 412,393 524,570 682,407 772,096 904,262 1,497,080 1,268,641 664,210 256,634 

Other Income 17,994 18,863 19,502 37,556 33,856 36,358 98,138 495,935 246,857 221,052 

Total Operating Income 734,887 659,051 821,683 1,121,860 1,500,801 2,305,920 3,364,270 3,234,879 984,944 (533,971) 

Operating Expenses (576,704) (566,808) (644,109) (804,437) (946,840) (1,454,326) (2,065,563) (2,539,681) (2,913,302) (3,158,108) 

Net Profit/(Loss) before Prov. for Loan Losses 158,183 92,243 177,574 317,423 553,961 851,594 1,298,707 695,198 (1,928,358) (3,692,080) 

Provision for Loan Losses (97,605) (27,138) (104,862) (201,346) (302,098) (248,384) (461,153) (191,472) (635,043) (593,858) 

Net Profit/(Loss) before Prov. for Taxation 60,578 65,105 72,712 116,077 251,863 603,210 837,553 503,726 (2,563,401) (4,285,937) 

Provision for Income Taxation - - - - - (20,000) (75,000) 158,893 - - 

Profit/ (Loss) for the year 60,578 65,105 72,712 116,077 251,863 583,210 762,553 662,619 (2,563,401) (4,285,937) 

Earnings per Share (Rs.) 5.34 5.74 3.56 5.68 12.33 28.56 37.34 32.45 (125.54) (209.90) 


58

B R A N C H N E T W O R K 

AMBALANTOTA 

No. 123, Main Street, 

Tel: 047- 2223210/ 2223842/ 2223843 

Fax: 047-2223136 

Email –ambalantota@thefinance.lk 

AMPARA 

No. 120, D. S. Senanayaka Mawatha, 

Tel: 063-2222326/ 2222669/ 2223070 

Fax: 063-2223135 

Email –ampara@thefinance.lk 

CHILAW 

No.53A, Puttlam Road, 

Tel: 032- 2222269/ 2223979/ 2221463 

Fax: 032- 2223443 

Email -chilaw@thefinance.lk 

DAMBULLA 

No. 689, Anuradhapura Road, 

Tel: 066- 2283183- 

Fax: 066- 2283388 

Email- dambulla@thefinance.lk 

KADAWATHA 

No. 1026,Kandy Road, 

Tel: 2925305/ 2926259/ 

2921325/2821621-5 

Fax: 2928173 

Email-kadawatha@thefinance.lk 

KALUTARA 


Tel: 034-2222623/ 2228900/2228901 

Fax: 034-2223159 

Email-kalutara@thefinance.lk 

ANURADHAPURA 

No. 514A/5, Maithripala 

Senanayake Mawatha, 

Tel: 025-2222443/0254-581107 

Fax: 025-2221379 

Email –anuradhapura@thefinance.lk 

EMBILIPITIYA 

No. 59, Main Street,, 

Tel: 047-2230159/2230990 

Fax: 047-2230991 

Email-embilipitiya@thefinance.lk 

KANDY 

No. 281,D S Senanayeke Veediya, 

Tel: 081-2226170/ 2226160 

Fax: 081-2234304 

Email-kandy@thefinance.lk 

AVISSAWELLA 

No.73, Ratnapura Road 

Tel: 036-2222216/ 2222820/2230117 

Fax: 036-2231071 

Email –avissawella@thefinance.lk 

GALLE 

No. 28, Havelock Road, 

Tel: 091-2232166/2234166/2225051 

Fax: 091-2223860 

Email-galle@thefinance.lk 

KEGALLE 

No. 171, Colombo Road, 

Tel: 035-2223082/ 2222734/2230975 

Fax: 035-2230976 

Email-kegalle@thefinance.lk 

BADULLA 

No.79, Ward Street, 

Tel: 055-2222557/ 2222682/2223982 

Fax: 055-2223149 

Email –badulla@thefinance.lk 

GAMPAHA 

No. 99, Bauddhaloka Mawatha 

Tel: 033-2226572/2227888 

Fax: 033-4670176 

Email-gampaha@thefinance.lk 

KULIYAPITIYA 

No. 50, Madampe Road, 

Tel: 037-2281122/2282015 

Fax: 037-2282271 

Email-kuliyapitiya@thefinance.lk 

BALANGODA 

No.119, Barnes Rathwatta Mawatha, 

Tel: 045-228887/045-4922600 

Fax: 045-2286561 

Email –balangoda@thefinance.lk 

HORANA 

No. 141- D, Ratnapura Road, 

Tel: 034-2261400/2260913/ 

2260914/2260122 

Fax: 034-2261565 

Email-horana@thefinance.lk 

KURUNEGALA 

No. 185/2, Puttalam Road, 

Tel: 037-4690077/4690076 

Fax: 0374-690899 

Email-kurunegala@thefinance.lk 

BANDARAWELA 

No.501, Badulla Road, 

Tel: 057-2224866 

Fax: 057-2232053 

Email –bandarawela@thefinance.lk 

JA-ELA 

No.159/A, Colombo Road 

Tel: 2232847/ 2236495/2244651 

Fax: 2237379 

Email-ja-ela@thefinance.lk 

MAHIYANGANA 

No. 1, New Town 

Tel: 055-2257558/2257559 

Fax: 055-2257214 

Email-mahiyangana@thefinance.lk 

BATTICALOA 

No.57, Central Road, 

Tel: 065-2222521 

Fax: 065-2222896 

Email –batticaloa@thefinance.lk 

JAFFNA 

No. 173, Stanley Road, 

Tel: 021-2222310/2226256 

Fax: 021-2222310 

Email-jaffna@thefinance.lk 

MATALE 


Tel: 066-2222189/2224172 

Fax: 066-2224401 

Email-matale@thefinance.lk 


59

B R A N C H N E T W O R K ( C O N T D . ) 

MATARA 

No. 169, Anagarika Dharmapala Mw., 

Tel: 041-2222533/2222766/2228224 

Fax: 041-2228223 

Email-matara@thefinance.lk 

METROPOLITAN 

No. 194, Galle Road,Dehiwala 

Tel: 2740400 

Fax: 2740433/2740444 

Email-newcity@thefinance.lk 

NUGEGODA 

No. 214, High Level Road, 

Tel: 2853765/2818047/2815283/ 

2815281/2815282 

Fax: 5541241 

Email-nugegoda@thefinance.lk 

NUWARA ELIYA 

No. 158/1, Poddaramulla Building, 

Kandy Road, 

Tel: 052-2235996 

Fax: 052-2223551 

MORATUWA 

No. 293, Galle Road, 

Tel: 2647777/2648367/ 

2644831/2647046/2647808 

Fax: 2648956 

Email-moratuwa@thefinance.lk 

NEGOMBO 

No. 32, Ave Maria Road, 

Tel : No 031-2233003/ 

22235024/2235025 

Fax No : 031-2233946 

Email-negombo@thefinance.lk 

NITTAMBUWA 

No. 195/1, Colombo Road, 

Tel: 033-2295889 

Fax: 033-2295890 

Email-nittambuwa@thefinance.lk 

NIKAWERATIYA 

No. 81, Kurunegala Road, 

Tel: 037-2260860 

Fax : 037-2260031 

Email-nikaweratiya@thefinance.lk 

POLONNARUWA 

No. 80, Batticaloa Road, 

Tel: 027-2222296/ 

2224851/2224852 

Fax: 027-2222500 

Email-polonnaruwa@thefinance.lk 

RATNAPURA 

No. 59F/A, Bandaranayake Mawatha. 

Tel: 045-2223897/2222031 

Fax: 045-2232335 

Email- ratnapura@thefinance.lk 

TRINCOMALEE 

No. 164/1, 

Thirugnanasampanthar Veethi, 

Tel: 026- 2227722/3202081 

Fax: 026-2227722 

Email-trincomalee@thefinance.lk 

VAVUNIYA 

No. 73B, 2nd 

Cross Street, 

Tel: 024-2224690 

Fax: 024-4589535 

Email-vavuniya@thefinance.lk 


60

S E RV I C E C E N T R E S 

Maharagama 

No. 189, Old Road,Maharagama. 

T.P.011-2745110 

E-Mail: maharagama@thefinance.lk 

Date opened 20/12/2004 

Main Branch:Homagama. 

Melsiripura 

Dambulla Road, Melsiripura 

T.P./Fax 037 2250480 

E-Mail: melsiripura@thefinance.lk 


Main Branch: Kurunegala 

Hatton 

No 199B, Dimbulla Road, Hatton 

T.P. 051-2225250 

Fax: 051-2225251 

E-Mail: hatton@thefinance.lk 


Main Branch:Kegalle 

Malabe 

No .766-1/2, Kaduwela Road, 

Malabe. 

T.P: 011-2760988 

E-Mail:malabe@thefinance.lk 


Main Branch :Nugegoda. 

Nawalapitiya 

No. 30, Ambagamuwa Road, 

Nawalapitiya. 

Tel: 054-2224294 

Fax: 054- 2224293 

E-Mail: nawalapitiya@thefinance.lk 


Main Branch :Kegalle 

Kiribathgoda 

No. 145/1, Kandy Road, 

Dalugama, Kelaniya. 

T.P. 011-5540800 

E-Mail: kiribathgoda@thefinance.lk 


Main Branch :Kadawatha 

Monaragala 

No: 25, New Bus Stand Road. 

Monaragala. 

T.P 055-2277342 

Fax-055-2277393 

E-Mail:monaragala@thefinance.lk 


Main Branch: Badulla 

Matugama 

No. 142/B,Aluthgama Road, 

Matugama. 

T.P.034-2248383 

E-Mail:matugama@thefinance.lk 


Main Branch : Kalutara. 

Piliyandala 

No. 32,1/1, Maharagama Road, 

Piliyandala. 

T.P.011-2606382, 4933639 

Fax: 011-2606382 

E-Mail:piliyandala@thefinance.lk 


Main Branch : Moratuwa. 

Wellawatte 

No.50, 1/5, Colombo Plaza, 

Galle Road, Colombo 06. 

T.P. 011-2502725 

Email : northeast@thefinance.lk 


Main Branch :Jaffna. 

Nelliady 

No. 36, Main Street,Nelliady. 

T.P. 021-2264170 

Email : nelliady@thefinance.lk 


Main Branch : Jaffna. 

Chavakachcheri 

No.19, Kachchai Road, 

Chavakachcheri 

T.P. 021-2270035 

Email :chavakachcheri@thefinance.lk 


Main Branch : Jaffna. 

Elpitiya 

No. 21, Dambulu Building, 

Ambalangoda Road, Elpitiya. 

T.P/Fax. 091 2290397 

Email:elpitiya@thefinance.lk 


Main Branch :Galle. 

Ruwanwella 

No.76, Main Street, 

Ruwanwella. 

T.P. 036-2267567, 2266792 

E-Mail:ruwanwella@thefinance.lk 


Main Branch : Avissawella. 


61

A G R O B R A N C H E S 

ALAWATHGODA 

No. 809, Matale Road, Alawathugoda. 

Tel: 066- 2243308 

Email: alawathugoda@thefinance.lk 

HINGURAKGODA 

No.23, Air Port Road. 

Tel: 027- 2245290 

Email: hingurakgoda@thefiannce.lk 

BADURALIYA 

Rathnapura Road. 

Tel: 034- 2241066 

Email: baduraliya@thefinance.lk 

GALEWELA 

No.59, Kalawewa Road. 

Tel: 066- 2288115 

Email: galewela@thefinance.lk 

NELUWA 

1st Floor, Pasan Building, 

Deluwa Road. 

Tel: 091- 5620625 

Email: neluwa@thefinance.lk 

THABUTHTHEGAMA 

No.59, 1st Floor, Rajangana Junction, 

Tel: 025- 2275055 

Email: thabuththegama@thefinance.lk 

HAPUTALE 

No. 166/1, 168/1, 

Dambethenna Road. 

Tel: 057- 2268344 

Email: haputale@thefinance.lk 

TISSAMAHARAMA 

No. 186, Hambantota Road. 

Tel: 047- 2239497 

Email: tissamaharama@thefinance.lk 

D I V I S I O N S 

BUSINESS LEASING DIVISION 

No.194, Galle Road, Dehiwela. 

Tel: 4308601/2 

Fax: 4740701 

Email: dehiwela@thefinance.lk 

INTERNAL AUDIT DIVISION 


Tel: 4208801 

Fax: 4716402 

Email: iaudit@thefinance.lk 

MARKETING DIVISION 

No.55, R.A. De Mel Mawatha, 


Tel: 2586050 

Fax: 2506051 

Email: marketing@thefinance.lk 

CORPORATE FINANCE 

AND TREASURY DIVISION 

No.55, (Lauries Place) 

R.A. De Mel Mawatha, Colombo 4. 

Tel: 2500671/ 2500678/ 2500689 

Fax: 2500583 

Email: treasury@thefinance.lk 

PROPERTY DEVELOPMENT 

DIVISION 


Tel: 4879780 

Fax: 4209130 

STORES 

No.315, New Kandy Road, Pittugala, 

Malabe 

Tel: 2412437/ 2413020 

Fax: 2413460-1 

Email: store@thefinance.lk 

FIXED DEPOSIT DIVISION 

1st Floor, No. 97, Hyde Park Corner, 


Tel: 2682745/ 2684278/ 2682747/8 

Fax: 4614848/ 2682746 

Email: cityfixed@thefinance.lk 

REAL ESTATE DIVISION 

No. 97, Hyde Park Corner, 


Tel: 2695695/ 5566300 

Fax: 2682744 

Email: realestate@thefinance.lk 

LEGAL SERVICES DIVISION 

No. 29/24, Visakha Place,Colombo 4. 

Tel: 2584901/ 2584898/ 

2584900/ 4939933 

Fax: 2584899 

Email: legalservice@thefinance.lk 


62

F O R M O F P R O X Y 

I/We………………………………………………………………………………………… 

of ……………………………………………………………………………………………….. 

being a member/members of The Finance Company PLC hereby appoint: 

Mr/Mrs/Miss…………………………………………………………………………………… 

Of……………………………………………………………………………………(NIC 

NO…………………………..) whom failing 

1. Kamal Jayantha Yatawara of Nugegoda whom failing 

2. Mrs Nayana Chandani Rupasinghe of Etul Kotte whom failing 

3. Mrs Violet Wimala Dissanayake of Malabe whom failing 

4. Tissa Bandara Ekanayake of Nugegoda whom failing 

5. Desh. Dr Jivaka lalith Bhupendra Kotelawala of Colombo 5 whom failing 

6. Mrs Padmini Kamaladevi Karunanayake of Colombo 5 whom failing 

7. Sanka Ravi Wijesinghe of Colombo 4 whom failing 

8. Ajith Rohan Gunewardena of Mount Lavinia whom failing 

9. Kuruppu Arachchige Sunil Jayatissa of Hokandara whom failing 

10. Telge Nihal Mahinda Peiris of Dehiwela whom failing 

11. Ms Malini Sabaratnam of Colombo 4 whom failing 

12. Yasanayake Bandara Ratnayake of Kohuwela whom failing 

as my/our proxy to represent me/us on my/our behalf at the 70 

th 

Annual General Meeting of the Company 

to be held on the 29 

th 

day of November 2010 at the Fingara Town and Country Club No 50/21 Old Kesbewa 

Road Rattanapitiya, Boralesgamuwa at 10.00 a m and at any adjournment thereof. 

Signed this……………………….. day of ……………………… Two Thousand and Ten. 

……………………………………….. 

NIC NO./P.P. NO./CO. REG. NO. 

……………………………………. 

SIGNATURE 

Folio Number…………………….. 

INSTRUCTIONS AS TO COMPLETION 

Kindly perfect the form of proxy, after filling in legibly your full name and address, by signing in the space 

provided and filling in the date of signature. 

If the proxy is signed by an Attorney, the relative power of Attorney should also accompany the proxy form 

for registration if such Power of Attorney has not already been registered with the Company. 

The Completed form of proxy should be deposited at the Head Office at No 55, (Lauries Place), R A De 

Mel Mawatha, Colombo 4, not later than 48 hours before the holding of the Meeting. 

In the case of a Company/Corporation the proxy must be under its Common Seal which should be affixed 

and attested in the manner prescribed by its Articles of Association or Constitution. 

T H E F I N A N C E C O . P L C - A N N U A L R E P O RT 2 0 0 9 - 2 0 1 0

ERRATA 

st 

Please note the following corrections to the enclosed audited Financial Statements –Year ended 31 March 2010 

Page Sub Heading Note No. Action Correction 

No. 

21 Cash Flow Statement After Interest paid on 

borrowings 

Change sentence “Cash flow from Investing 

activities” 

To “Cash flows from Operating 

activities” 

32 Profit / (Loss) Before 

Provision for credit Losses 

& Taxation 

6 Insert Management Fees – Managing 

Agent Rs. 36,750,000 (2008/09 nil) 

42 Investment Securities 

(cont..) 

51 Related Party Transactions 

(cont… ) 

51 Related Party Transactions 

(cont…) 

21 Change TFC Homes Pvt Ltd is a 

discontinued operation and therefore 

not consolidated 

36 Insert Total amount of Rs. 178.5Mn have 

been paid by the TFC to Ceylinco 

Insurance PLC as Insurance 

Premium of the TFC customer 

contracts, which are reimbursed by 

the customers. 

36 Delete Mr. T.N.M. Peiris and Mr. S.R. 

Wijesinghe are not directors of the 

Ceylinco Printing & Stationery 

(Pvt) Ltd . 

T H E F I N A N C E C O . P L C

Annual Report.CDR - Colombo Stock Exchange

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