Annual Report.CDR - Colombo Stock Exchange

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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 <strong>Report</strong> 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. <strong>Report</strong> 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 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 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. 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 18
Page 2 and 3: C O N T E N T S Financial Highlight
Page 4 and 5: C O R P O R AT E I N F O R M AT I O
Page 6 and 7: K E Y E X E C U T I V E S M E S S A
Page 8 and 9: R E V I E W O F O P E R AT I O N S
Page 10 and 11: R E P O RT O F T H E D I R E C T O
Page 12 and 13: R E P O RT O F T H E D I R E C T O
Page 14 and 15: C O R P O R AT E G O V E R N A N C
Page 16 and 17: STATEMENT OF DIRECTORS RESPONSIBILI
Page 20 and 21: BALANCE SHEET AS AT 31.3.2010 31.3.
Page 22 and 23: CASH FLOW STATEMENT FOR THE YEAR EN
Page 24 and 25: S I G N I F I C A N T A C C O U N T
Page 32 and 33: NOTES TO THE FINANCIAL STATEMENTS F
Page 34 and 35: NOTES TO THE FINANCIAL STATEMENTS (
Page 58 and 59: S H A R E H O L D E R I N F O R M A
Page 60 and 61: B R A N C H N E T W O R K AMBALANTO
Page 62 and 63: S E RV I C E C E N T R E S Maharaga
Page 64 and 65: F O R M O F P R O X Y I/We………

Annual Report.CDR - Colombo Stock Exchange

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