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Arpico Finance Company PLC Annual Report 2011/2012 1

Corporate Information 3-4

Notice of Meeting 5

Chairman’s Review 6-8

Oprational Review 9-11

Board of Directors & Senior Management 12-14

Corporate Governance 15-21

Audit Commiee Report 22

Risk Management 23-24

Annual Report of the Board of Directors 25-27Shareholders’ Information 28-29

Board Report on Internal Controls 30

Statement of Directors’ Responsibilities in

Relation to Financial Statments 31

Chief Executive Ocer’s and

Chief Financial Ocer’s Responsibility Statement 32

Independent Auditor’s Report 33

Income Statement 34

Balance Sheet 35

Statement of Changes in Equity 36

Cash Flow Statement 37

Notes to the Financial Statements 38-66

Financial Highlights 67

Ten Years Summary 68

The Human Capital 69

Form of Proxy Enclosed

C O N T E N T s

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2 Arpico Finance Company PLC Annual Report 2011/2012

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BOARD OF DIRECTORS

Cairma Bri Ponnambalam(Appointed with eect from 01/01/2012)

Maai Director H Rajudin DipM(UK) ,GC.Mgt.(USQ),FCIM(UK),Finst CM

(UK),FSLIM

(Appointed with eect from 01/06/2012)

Director Leal Ruvini E Weerasinghe (Mrs) Aorney-at-Law

Fiace Director Bede Jayalath ACMA , MBA (Sri J)

Director Lyle Dennis Peiris FICM (SL)

Director Nilanka Mevan Pieris ACMA , A.I.B

(Appointed with eect from 01/01/2012)

Pratapkumar de SilvaFormer ChairmanF.I.C.M (SL) , F.I.C.M (ENG) JP(Relinquished duties with eect from 31/12/2011)

D.L.S.R PereraFormer Deputy ChairmanF.C.A(Relinquished duties with eect from 31/12/2011)

Senakke R BandaranayakeFormer Joint Managing Director(Relinquished duties with eect from 31/05/2012)

Romani de SilvaFormer DirectorFICM (SL)(Relinquished duties with eect from 31/12/2011)

STATuTORy STATuSQuoted Public Limited Liability Company. Incorporated under the Companies Ordinance No. 51 of 1938.The Company was re-registered under the Companies Act No. 7 of 2007. Registered under The FinanceBusiness Act No.42 of 2011 and Finance Leasing Act No. 56 of 2000. An approved Credit Agency underThe Mortgage Act No.6 of 1949 and The Trust Receipt Ordinance No.12 of 1947.

COMpAny RE-REgISTRATIOn nO. PQ 92

REgISTERED OFFICE 146, Havelock Road, Colombo 5.

E-MAIL [email protected]

TELEphOnE 5553663, 2598490 /1

FAx 2500259

COrpOraTE INfOrmaTION

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SECRETARIES Alliance Management Services (Pvt) Ltd.,

No: 84, Ward Place, Colombo 7.

AuDITORS M/s SJMS Associates,

Chartered Accountants,

No. 02, Castle Lane,

Colombo 04.

BAnkERS Seylan Bank PLC

Sampath Bank PLCHaon National Bank PLC

Bank of Ceylon

People’s Bank

Standard Chartered Bank

Deutsche Bank

Union Bank

NDB Bank PLC

InTERnAL AuDITORS M/s HLB Edirisinghe & Co.,

Chartered Accountants,

45, 2nd Floor, Braybrooke Street, Colombo 2.

ADvISORy COunCIL Mr Pratapkumar de Silva

Senior Advisor

F.I.C.M (SL) , F.I.C.M (ENG) JP

Mr Romani de Silva

FICM (SL)

Mr D.L.S.R Perera

F.C.A

AuDIT COMMITTEE Mr Nilanka Mevan Pieris - Chairman ACMA , A.I.B

Mr Lyle Dennis Peiris FICM (SL)

Mr Bri Ponnambalam ( By Invitation)

REMunERATIOn COMMITTEE Mr Bri Ponnambalam - Chairman

Mr Nilanka Mevan Pieris

Mr Lyle Dennis Peiris

COrpOraTE INfOrmaTION

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Notice is hereby given that the Sixty First Annual General Meeting of Arpico Finance CompanyPLC, will be held on Wednesday, 22nd August, 2012 at 10.00 a.m., at the Auditorium, Institute ofChartered Accountants of Sri Lanka, 30A, Malalasekera Mawatha, Colombo 7.

The business to be brought before the meeting will be:

1. To receive and consider the Report of the Directors and the Statement of Accounts for theFinancial Year ended 31st March 2012.

2. To declare a Dividend.

3. To re-elect a Director

Mr. W.J.D.B.L. Jayalath retires under Articles numbered 130 and 131

4. To re-elect a DirectorMr. B. Ponnambalam retires under Article No. 135.

5. To re-elect a Director

Mr. N.M. Pieirs retires under Article No. 135.

6. To re-appoint Auditors to hold oce until the next Annual General Meeting and to x theirremuneration.

7. To authorize the Directors to determine and make donations.

8. To consider any other business of which due notice has been given.

By Order of the Board of Directors

Sgd.ALLIAnCE MAnAgEMEnT SERvICES (pvT) LTDSecretaries26th July, 2012

note:

(i) Amemberisentitledtoappointaproxytoaendandvoteinhis/herplace.

(ii) AproxyneednotbeamemberoftheCompany.

(iii) AmemberwishingtovotebyproxyatthemeetingmayusetheFormofProxyenclosedandinterpolatethewords“righttovote”.

(iv) Tobevalid,thecompletedFormofProxymustbelodgedattheoceoftheCompanySecretaries, AllianceManagementServices (Pvt)Ltd,No84,WardPlace,Colombo7notless than48hoursbeforethetimeappointedfortheholdingofthemeeting.

(v) Shareholders/ProxyholdersarerequestedwhenaendingtheAnnualGeneralMeetingtobringwiththemtheirNationalIdentityCardoranyotherformofvalididentication.

(vi) Shareholdersappointingproxies(otherthanDirectors)toaendtheMeetingarerequestedtoindicatetheNationalIdentityCardnumbersoftheProxyholdersontheFormofProxy.OnlyregisteredproxyholderswillbepermiedtoaendtheAnnualGeneralMeeting.

NOTICE Of mEETINg

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ChaIrmaN’s rEvIEw

May 16, 2012

It is with great pleasure that I welcome all the members to the 61st Annual General Meeting of

the Company. Once again, it was another successful year for the Company with the protability

recording a commendable year on year growth. The customer service aspect was also improved

by the addition of three new heritage delivery channels to the existing network.

During the year under review pre- and post tax prots were respectively Rs 51.8 M and Rs 32 M

which accounted for growths of 58% and 48% respectively. The disbursements grew by 33% torecord Rs 1743 M. The credit assets which were an important driver of revenue stood at Rs 2149 M

from Rs 1413 M, a year earlier which translated to a 52% growth. The credit assets as a proportion of

total assets stood at 75%. The deposit base and total assets too grew respectively to Rs 1700 M and

2872 M with the corresponding growth rates being 36% and 42%. These results were a reection of

the eorts and hard work of the sta at all levels which remain the main strength of the Company.

Most of the above growth rates were comparable with the industry.

These achievements were aributable to the cohesive integration of personnel at all levels from

Directors, management to sta. Much credit is due to the former members of the Board too who

gave strategic leadership to most part of these achievements. Mr J E P A de Silva, in particular,

was a director of the Company for 28 years of which 19 years was at the helm as the Chairman. He

made all these achievements possible through his amiable leadership. He resigned from service

and relinquished his post in December, 2011 aer a distinguished service to the Company. He

was a pioneer of the nancial services industry with over ve decades of industry knowledge

at all levels, both in corporate and industry representative associations. In compliance with the

new Corporate Governance direction which came into eect on the rst day of the year, two

other long standing directors with wide ranging industry experience, Messrs D L S R Perera

and Romani de Silva, too stepped down having completed the maximum period of service

specied for Non-Executive Directors by the direction. We take this opportunity to thank thedirectors for the services rendered over the years with a unique combination of business acumen

and industry knowledge. The Company is fortunate because all Directors who relinquished oce

have availed their services by being members of the re-constituted advisory council. In the same

spirit of assuring governance and compliance, I was appointed to the Board as the Chairman

and Mr N M Pieris as a Director. Both will work in the capacity of independent non-executive

directors and possess industry specic and general business experience. Mr N M Pieris is

also a professionally qualied accountant and a banker. Mr S R Bandaranayake, the Jt Managing

Director of the Company relinquished his duties with eect from 31st May, 2012 having served the

Company for 8 years. Whilst thanking him for the valuable services rendered we wish him well

in his future endeavors. The new Managing Director Mr Hefeez Rajudin took oce from 1st

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ChaIrmaN’s rEvIEw

June, 2012. Formerly, he was the Chief Executive Ocer of Merchant Credit of Sri Lanka and

was also a past Chairman of the Finance Houses Association. Professionally, he is a chartered

marketer with commercial qualications too. I welcome Mr Rajudin on Board and look forward

to a long and mutually rewarding association. Following the appointment of new Directors to the

board, the Board Commiees were also re-constituted. Messrs Bri Ponnambalam, L D Peiris and

N M Pieris have been appointed as Chairmen respectively to the Remuneration, Risk Review and

Audit commiees. The other members of the commiees are as detailed on page 04 of the report.

This was mainly to uphold governance structures which receive utmost importance as much as

performance in the corporate culture of the Company.

We at Arpico Finance consider our pivotal role being in the economic advancement of those with

least accessibility to credit and assuring protection to those who provide funding to the Company.

Our specially designed three / two wheeler and DIMO Baa nancing schemes helped economic

empowerment of the target segment and for them to reap the benets of the growing macro

economy. Our investments are mainly to feeder industries and individuals who provide primary

support to the growing service economy such as transport, tourism etc. Our success has been the

adaptation to the macro economy through various strategies for steady and sustainable growth.

Given the current positive economic environment, our obvious strategic option at present is to

accelerate growth. Towards this end, the Company has been adding to its existing network of

distribution channels to reach the depth and breadth of the target segment. We added three heritage

channels in Minuwangoda, Godagama and Mullaitivu together with other business partners

during the year under consideration. The new nancial year will evidence the opening of four new

branches in Matara, Matugama, Kandy and Narammala. The development of IT infrastructure

with wider accessibility will be another initiative for the forthcoming year. This focus is important

if we are to realize cost eciencies with geographical expansion.

DIvIDEnDS

The Board has recommended to pay a dividend of Rs 2.00 per share subject to approval by theshareholders.

CORpORATE SOCIAL RESpOnSIBILITy

The major CSR initiative of the company is the project to upli Siyambalagoda village. The project

entered its 21st year for which the company is a joint sponsor and has been making donations

continuously. Additionally there are other regular beneciaries which are entitled for donations

annually from the Company. Even the regular list of beneciaries happen to receive contributions

for a long period now.

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ChaIrmaN’s rEvIEw

ECOnOMy AnD FuTuRE

The provisional statistics indicate that the GDP growth for 2011 as 8.3% vis-à-vis 8% a year earlier.

The transport sector, which is of particular importance to the Company, grew almost on par with

last year by 11.3% with new registrations too achieving an appreciable growth but at a slower pace

than 2010. The Company’s results and the growth rates of key macro economic statistics indicate

that there is sucient correlation between them. However, the substantial depreciation of the

rupee and the increase of taxes/ duties for vehicles aected the growth momentum. The transport

sector is an important feeder industry to massive infrastructure and development projects. Further,

the regulated credit expansion in the banking sector may shi customers to the licensed nanceindustry. Therefore, there certainly are opportunities in both traditional and non-traditional

products. The Company has initiated a plan to capture business volumes for the sustenance of

the growth momentum hitherto accustomed to by the Company.

ACknOWLEDgEMEnTS

This year it was an all round performance be that in the sphere of protability, disbursements,

recoveries and containing delinquencies, funding and market development. This was only possible

due to the eorts of a well knit team and an integrated execution. I congratulate all employees for

the accomplishments and as the new Chairman, I look forward to strengthening the team spirit to

translate it to results both quantitative and qualitative. The objective is to bench mark the Company

with the best in the industry with an exponent performance. Credit is equally due to the Directors

and Advisory Councillors for the strategic direction, guidance and constructive performance

feedback. I thank them for the valuable contributions. Our shareholders and depositors are a

distinctive strength who have been standing rmly with us for years and I am grateful to them

for the trust and condence placed in the Company.

The Finance Business Act No 42 of 2011 was an important legislation that was enacted during

the year. This was a long felt need of the Finance Industry in the light of various threats fromunscrupulous players. I thank the Governor, Director and all the ocers of the Department of

Supervision of Non Banking Financial Institutions for their untiring eorts, regulatory guidance

and directions. The external auditors SJMS Associates, internal auditors H L B Edirisinghe & Co.,

Secretaries Alliance Management Services perform the all important assurance, compliance and

governance functions. I place on record my appreciation for their professional services. All the

stakeholders, I trust, will complement the eorts of each other to accomplish both short and long

term aspirations of the Company.

Bri Ponnambalam

Chairman

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OpEraTIONal rEvIEw

The Company continued its expansion programme into 2011/12 by opening three new heritage

channels at Minuwangoda, Godagama and Mullativu. The geographical expansion was

supplemented by the appointment of business partners in various other locations. These were the

market development eorts undertaken in order to penetrate the market with a view to make credit

accessible and to build market share in core investment products. The emphasis was to grant low

value high yield investments and as such reaching the depth and breadth of the market was an

absolute necessity. Another initiative that was pursued with vigour was to aract deposit funds to

nance the credit expansion. Several campaigns were launched to aract new deposits the results of

which were encouraging. The Company was able to accomplish a remarkable growth in the deposit

base in the last quarter of the year with the concerted eorts. Both credit and deposit growths arecomplementary whilst being key drivers of growth of the asset base of the Company.

pROFITABILITy

The Company capitalised on the conducive business environment that prevailed for most part of

the year. The interest rates moved favourably for most part but edged up from late 2011. There was

an increase in the new vehicle registrations though at a slower pace than last year. The Company’s

pre and post tax prots grew respectively by 58% and 48% to reach Rs 51.8 M and Rs 32 M. The

taxation charge for the year includes an accounting charge of Rs 15.9 M in respect of deferred tax.

The charge was both due to the decline in corporate tax rate and change in timing dierences. The

gross margin as measured by net interest to gross interest was 50% recording a marginal 4% increase

over last year. The year on year growth in net interest income was 34%. The interest income grew

by 24% to Rs 471 M whilst the interest expenditure increased only by 15% to Rs 233M.

The operating expenses increased by Rs 57 M or 32% to Rs 234M. Given the expansion into new

channels, the increase was in line with the expectations. The focus of the Management is to improve

cost eciency with the accrual of increased revenue from new channels adding to a faster growth

in income than the pace of increase in expenditure. Together with the increase in channels there

is also the need to recruit personnel and improve infrastructure. The eciencies are to be derivedin the medium term with the new channels achieving protability.

The Company’s only associate Alnco Insurance Brokers completed another successful year. The

share of prot from Alnco for the year was Rs 5.6 M. Alnco declared a dividend of Rs 2.1 M and

the income earned by placing insurance business was Rs 2.7 M

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InvESTMEnTS

The total disbursements for the year stood at Rs. 1743 M. This is a 33% growth over the preceding

year. Lease and Hire Purchase which are the core investment products accounted 88% of the total

disbursements. The Lease and Hire Purchase stock was Rs. 2149 M at the end of the year and the

growth was 52%. The credit expansion can be directly aributable to the geographical expansion

with high yield low value credit investments. This strategy which had been proved successful

would be continued to the new nancial year too.

RECOvERIES AnD ASSET QuALITy

Whilst increasing the disbursements the Company was successful in tightening the grip on

recoveries too. The total collections stood almost on par with the total rental debits for the year.

The recoveries performance has been one of the main strengths of the Company which eectively

complements the aggressive pursuit of credit investments. The gross NPL ratio improved further

to 1.9% from 3% in the year earlier. As the Company is accustomed to the latest NPL indicator

is beer than the industry average of 4.7 % in December 2011. In absolute terms, the total

provision stood at Rs. 25.6 M with the charge for the year being only Rs. 12.8 M. However, the

adverse movements, particularly, in cost of essentials and complementary goods to transport and

travelling vehicles will pose a threat to recoveries. The talented teams across functions from credit

appraisals, approvals, monitoring to nal recovery have proved their competence in containing

any risks in this sphere. Therefore, the Company is aware and await in readiness of the short term

challenges in aaining and maintaining recoveries and credit quality.

FunDIng

Funding for investments mainly comes from deposits. At the year end, the composition of

funding from deposits and borrowings were respectively 59% and 21% with the remainder coming,

mainly, from shareholder funds. The Company conducted many campaigns to capitalise on theCompany’s unparallel history being the 2nd oldest Finance Company with 61 years of operations.

The campaign was successful and enabled the Company to achieve a deposit growth

of Rs 448 M or 36%. This growth too was comparatively beer than the industry. During the last

quarter interest rates were increased in line with policy rates to oer competitive rates to

depositors. The Company certainly is bestowed with unique propositions such as reputed brand

and unblemished track record of 61 years. The trust built on these aributes contributes immensely

to mobilize deposits. Even the branch network was instrumental in achieving the above results

for the year. We have also given aention to raise long term funds from the local nancial market.

OpEraTIONal rEvIEw

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RATIng

RAM ratings once again armed long term BB rating and stable outlook to the Company at the

conclusion of the latest review. The Company is working consciously to improve its market share

both in terms of asset base and disbursements thereby to achieve cost eciencies and protability.

These are the elements that the Company has to work on in order to progress on the rating.

IFRS TRAnSITIOn

Financial statements of the Company should be compliant with SLFRSs and LKASs with eectfrom nancial years starting from January 1, 2012. The company has obtained the services of

Ernst & Young (E&Y) as consultants for the project. Our nance and operations sta would work

alongside E&Y to ensure that the nancial statements are fully compliant with the requirements.

The project involves the following steps.

1. Identication of the gaps between the current accounting practices and SLFRSs/ LKASs

2. Determination of SLFRS/ LKAS rst time adoption options and corresponding accounting

policies for implementation

3. Implementation of SLFRS/ LKAS requirements and preparation of nancial statements

4. Technical training for both nance and operations sta

The deliverables to be drawn from the exercise are:

1. Re-statement of SLFRS/ LKAS compliant opening balance sheet as at 1st April, 2011

2. Re-statement of SLFRS/ LKAS compliant comparative nancial statements for the year ended

31st March, 2012.

3. Preparation of SLFRS/ LKAS compliant nancial statements for the year ending 31st March,

2013 together with disclosures.

We have already completed the diagnostic study for the identication of gaps and prepared the

report based on the degree of importance of each area. The work related to implementation has

already commenced.

OpEraTIONal rEvIEw

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BOard Of dIrECTOrs &

sENIOr maNagEmENT

MR BRI pOnnAMBALAM - Chairman

( Appoted th eect from 01/01/2012)

He was a Non-Executive Director of Alliance Finance Co.PLC since 1994. He is also the Chairman

& Jt Managing Director of Cars-R-US and is a Director of Macbertan (Pvt) Ltd and Mc Larens

Lubricants Ltd and also holds several Directorates. He has many year of experience in the motor

industry and corporate management.

MR hAFEEz RAjuDIn - ManagingDirector

(Appoted th eect from 01/06/2012)

He is a Chartered Marketer and a Fellow of the Chartered Institute of Marketing,UK(FCIM).He

holds a Postgraduate Diploma in Marketing, from the Chartered Institute of Marketing(CIM), UK

and a Postgraduate Diploma in Business & Financial Administration awarded by the Institute

of Chartered Accountants of Sri Lanka in association with the Craneld University School of

Management, UK,Fellow of the Institute of Commercial Management,UK and Fellow Member, Sri

Lanka Institute of Marketing. He is a senior faculty member of the Faculty of Graduate Studies of

the University of Colombo and a Senior Lecturer of the Business School of the Institute of Chartered

Accountants of Sri Lanka.He is also a member of the Sri Lanka Foundation Teaching Faculty.

He was the former Chief Executive Ocer of Merchant Credit of Sri Lanka Ltd. He serves as theimmediate Past Chairman of The Finance Houses Association of Sri Lanka, the apex body that

comprises of over 40 registered Finance Companies.

MS RuvInI E WEERASInghE - DirectressLegal

An Aorney – at – Law. Joined the Company in 1997, formed the Legal Department and held

several positions within the Department before being appointed to the Board in 2004. A past

Chairperson and an active member of the Legal Circle of The Finance Houses Association of

Sri Lanka.

MR BEDE jAyALATh - FinanceDirector

Joined as the Finance Manager in 2002 and was appointed to the Board in 2004. An Associate of

the Chartered Institute of Management Accountants, UK. Holder of Masters Degree in Business

Administration (MBA) from the PIM of University of Sri Jayewardenepura. He had been

awarded the Competent Communicator and Competent Leader certicates from the Toastmasters

International-USA. He was a Past President of the CIMA Toastmasters club. Formerly, he was the

General Manager, Finance and Administration of Jardine Fleming HNB. He posesses nearly 30

years experience in a multitude of industries sush as manufacturing, trading, hospitality, nancial

services, stock brokering and investment banking.

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BOard Of dIrECTOrs & sENIOr maNagEmENT

MR. LyLE DEnnIS pEIRIS - Director

He is a Fellow member of the institute of Credit Management Sri Lanka. He has over 30 years

exeperience as a Senior Manager out of which 22 years are at Board level.

He was the Deputy Chairman of Delmege Insurance Brokers (Pvt) Ltd. prior to which he held

the post of Managing Director. He had functioned as the Managing Director of LB Finance Ltd.

& Delmege Financial Services (Pvt) Ltd. He had held many board positions within the Delmege

Group of Companies. A past Chairman of Finance Houses Association of Sri Lanka, he is presently

the Vice President of SL Institute of Credit Management.

MR nILAnkA MEvAn pIERIS - Director

( Appoted th eect from 01/01/2012)

He is an Associate Member of the Institute of Bankers of Sri Lanka and also an Associate Member

of the Chartered Institute of Management Accountants -UK. He is also a Chartered Global

Management Accountant - He has over 10 years of experience in Senior Management.

He is the Managing Director of Global Convention (Pvt) Ltd and holds directorships in many

other companies.

MR. D v DhARShAn SILvA - ChiefOperatingOcer

Product of Royal College Colombo.

Registered Investment Advisor (Financial Services Academy - Securities and Exechange

Commission of Sri Lanka), Finalist CIMA (UK), Diploma holder of Computer system Design

(NIBM Sri Lanka) with a distinction pass, Certicate holder of TOT in Micro Finance (Frankful

School of Management Germany). He also has participated in extensive workshops, seminars and

training and development programmes within Sri Lanka and also in Thailand, and in Australia.

26 year consecutive experience in the nancial services in public limited companies in Sri Lanka,

DFCC Bank, and Commercial Leasing Company PLC.

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MR pRATApkuMAR DE SILvA - Former Chairman

(Relhed dte th eect from 31/12/2011)

He is a Fellow member of the Institute of Credit Management, Sri Lanka. Fellow member of the Institute of CreditManagement, England and Justice of the Peace. First Sri Lankan to be honoured as a Fellow of the Institute ofCredit Management, England. He is the Honorary Consul of the Republic of Peru in Sri Lanka. He carries 55years experience in the Finance Sector. He is a Director of HNB Assurance PLC and several other companiestoo. President - Sri Lanka Institute of Credit Management. Director representing Finance Companies on theBoard of the Credit Information Bureau of Sri Lanka. Advisory Councillor - Council of The Finance HousesAssociation of Sri Lanka .

MR D L S R pERERA - Former DeputyChairman(Relhed dte th eect from 31/12/2011)

He is a Fellow member of The Institute of Chartered Accountants of Sri Lanka. He is the Finance Director of

Alliance Finance Co.PLC. He has wide experience in the eld of nance and corporate management. A successful

businessman, he manages family-owned businesses and is on the Boards of several companies. Counts over 30

years experience in the Financial sector.

MR ROMAnI DE SILvA - Former Director


He is a Fellow member of the Institute of Credit Management, Sri Lanka. He is the Deputy Chairman andManaging Director of Alliance Finance Co.PLC, He holds Directorates in many companies. He counts over 25years experience in the nance industry.

He is also the Deputy Chairman of several companies within the Alliance Group. He is the pioneer ofCollaboration Financing - a unique nancing concept designed to provide nance for entrepreneurs to expandtheir businesses. The creation of this concept resulted in Alliance Finance becoming the rst and only FinanceCompany in Sri Lanka to be awarded the ISO 9001 Certication for designing business-specic nancial solutions.He was also awarded two Bronze Awards for this innovation at Provincial and National levels at the SriLankan Entrepreneur of the year 2001 contest.

He is a Life Member of the Sri Lanka Institute of Directors, a Member of the Chamber of Young LankanEntrepreneurs, Represents the Company as a Council Member of the Finance Houses Association of Sri Lanka.

MR S R BAnDARAnAyAkE - Former JtManagingDirector


Joined the Company as Jt Managing Director to the Board in 2004. Director of Alnco Insurance Brokers (Pvt)Ltd. Former Executive Director of The Finance Co. PLC.

BOard Of dIrECTOrs & sENIOr maNagEmENT

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COrpOraTE gOvErNaNCE

1. Finance Companies (Corporate Governance) Direction No.3 of 2008 as amended

The objectives of governance, in main, is to ensure conformance with applicable Statutes, rules and regulation.

It is also meant for that the system of internal control, risk managment, responsibilities are properly identied,

allocated and given adequate emphasis in pursuit of performance objectives. The outcome would be the balance

of both risks and returns with proper checks.

The compliance by the Company with the above governance direction is tabulated below.

Decrpto ad pararaph referece

Repoblte of the Board- pararaph 2

Approving and overseeing strategic objectives and corporatevalues and communicate them.

Approving business strategy, risk policy and management withmeasurable goals for at least three years.

Identication and management of risks prudently

Approving a process of communication with all stakeholders.

Review adequacy and the integrity of internal control systemand MIS

Identication and designation of key management personnel

Dening areas of authority and key responsibilities for the board and key management

Ensuring that key management personnel oversee the aairsappropriately.

Assessing eectiveness of governance practices includingnomination/ selection of directors & key management,managing conict of interests, determining weaknesses andeecting changes

Periodically assessing the eectiveness of the governancepractices ensuring that there is a succession plan for keymanagement.

Deree of complace

Compliant.-Business plan and budget areapproved and KPIs stemmingfrom plans are communicated.

Compliant.

Compliant. By the boardappointed Risk Commiee.

Compliant. There is timelydissemination of informationand nancial report.

Compliant. Through groupinternal audit and internalauditors

Compliant.

Compliant. Through jobdescriptions.

Compliant. By the functions ofmanagement commiee.

Compliant. Board wasrestructured with the required

balance. Key recruitments areapproved by the directors.

Compliant.

Ref code

2(1) a

2(1) b

2(1) c

2(1) d

2(1) e

2(1) f

2(1) g

2(1) h

2(1) i

2(1) j

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Regular meetings with key management to assess policies,communication lines and progress towards corporateobjectives.

Understanding the regulatory environment

Exercising due diligence in hiring and oversight of externalauditors.

Board shall dene and approve the functions of chairman andChief Executive OcerProcedure to enable the directors to seek independentprofessional advice upon reasonable request.

Board shall have a formal schedule of maers reserved to itand ensure that direction and control is under its authority

Board shall include in Annual Report a corporate governancereport seing out compliance with this Direction

Meet of the Board - Pararaph 3

Board shall meet twelve times in a nancial year.

Arrangements for the directors to add agenda items pertainingto the promotion of business and the management of risks.

At least seven days notice for the regular board meetings andreasonable notice for other meetings.

Appointment of Company Secretary to handle statutory,regulatory and secretarial services.

Preparation of the agenda for a Board Meeting by CompanySecretary.

Directors’ access to advice and services of the CompanySecretary.

Maintenance of Minutes of Board Meetings by the CompanySecretary and make it available for inspection by any Director.

Recording of the Minutes of Board Meetings with sucient

detail to gather whether the Board acted with due care andprudence in performing its duties.

Deree of complace

Compliant.

Compliant. Attend regulartrainings when necessary.

Compliant. Appointed at the

AGM.

Compliant.

Compliant.

Compliant. As specied in theagenda.

Compliant.

Compliant.

C o m p l i a n t . A g e n d a i sc i r c u l a t e d i n a d v a n c epermiing time for changes.

Compliant.

Compliant.

Compliant

Compliant.

Compliant.

Compliant.

Ref code

2(1) k

2(1) l

2(1) m

2(2)

2(3)

2(5)

2(7)

3(1)

3(2)

3(3)

3(5)

3(6)

3(7)

3(8)

3(9)

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Compoto of the Board- Pararaph 4

Directors on Board shall not be less than 5 and not more than 13

Period of service of a Director other than an Executive Director

shall not exceed nine years.

Number of Executive Directors shall not exceed one-half of the

number of Directors on the board.

The Number of Independent Non-Executive Directors of

the Board shall be at least one fourth of the total number of

Directors.

Non-Executive Directors shall have necessary skills and

experience on strategy, performance and resources.

The Independent Non-Executive Directors shall be expresslyidentied in all corporate communications and in the annual

corporate governance report

A formal and transparent procedure for the appointment of the

new Directors and for their orderly succession.

Crtera to ae the te ad propret of drector-

Pararaph 5

A person over the age of 70 years shall not be a Director.

A Director shall not hold oce as a Director or other equivalent

position in more than 20 companies/ societies/ body corporates

nor in 10 specied business entities.

Deleato of fcto – Pararaph 6

Board shall not delegate any matters to anyone so as to

significantly hinder or reduce the ability of the Board to

discharge its functions.

Deree of complace

Compliant. Six directors on

the board.

Compliant.

Compliant. Three executive

directors on the board.

Compliant. Three directors are

independent non-executive.

Compliant. Refer profiles of

directors on pages 12 and 13

Compliant. Few corporatec o m m u n i c a t i o n s n e e d

modications

Compliant.

Compliant.

Compliant.

Compliant.

Ref code

4(1)

4(2)

4(3)

4(4)

4(6)

4(8)

4(9)

5(1)

5(2)

6(1)

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The Charma ad the Chef Exectve Ocer –

parara 7

Separation of the roles of Chairman and Chief Executive Ocer

The Chairman shall be an Independent Non-Executive Director.

Chairman shall provide leadership to the Board, ensure eectivedischarge of responsibilities and all issues are discussed in atimely manner.

Responsibility of the Chairman for either the preparation ordelegating the preparation of agenda to the company secretary.

Chairman shall encourage directors to make a full and activecontribution and ensure that the Board acts in the best interestof the company.

Chairman shall facilitate eective contribution byNon-Executive Directors and constructive relationships amongDirectors

Chairman shall not engage in direct supervision of keymanagement personnel or any other executive duties.

Chairman shall ensure the eective communication with theshareholders and the views of shareholders are communicatedto the Board.

Chief Executive Ocer shall be the apex executive in chargeof the day to day management.

Board Appoted Commee –Pararaph 8

Company shall have at least two board commiees (Audit &Risk) reporting directly to the board.

Audit Commiee

Chairman shall be a Non-Executive Director with accountingqualication.

Members shall be Non-Executive Directors.

Shall make recommendations about the appointment ofauditors, service period, audit fee, period of an engagement ofan audit partner and the application of accounting standards.

Deree of complace

Compliant.

Compliant

Compliant.

Compliant.

Compliant.

Compliant

Compliant.

C o m p l i a n t . A l lcommunications in turn arereferred to the Board.

Compliant.

Compliant.

Compliant.Mr. N.M. Pieris-ACMA-UK

Compliant.

Compliant.

Ref code

7(1)

7(2)

7(4)

7(5)

7(7)

7(8)

7(9)

7(10)

7(11)

8(1)

8(2)

8(2) a

8(2) b

8(2) c

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Review the eectiveness of audit process and monitor theexternal auditors’ independence & objectivity.

Shall develop an approved policy for the engagement ofexternal auditors to provide non audit services, to assureindependence of external auditors.

Prior to audit, commiee shall discuss and nalize the natureand scope of audit, assessment of compliance with directionsand preparation of financial statements compatible withaccounting standards and reporting principles.

Monitor integrity, signicant judgments, changes in accountingpolicies and practices, adjustments arising from the audit in thepreparation of nancial information and reports.

Review management leer and management response there to.

Consider ndings of internal investigations and managementresponses there to.

Meet external auditors once in 6 months without ExecutiveDirectors being present.

Shall have authority to investigate any maer within TOR,acquire resources and access to information.

Meet regularly, give notice of issues to be discussed and recordconclusions.

Annual Report to disclose activities of the Audit Commiee,Audit Commiee meetings and aendance of each individualmember.

The Secretary shall record and keep detailed minutes.

Review arrangements for employees to raise concerns incondence about nancial reporting and internal control andensure fair and independent investigation and appropriate

follow up action.

Deree of complace

Compliant. Management leeris directed to the Board.

C o m p l i a n t . N o n a u d i tassignments were not givento external auditors.

Compliant.

C o m p l i a n t . E x t e r n a land internal auditors andgroup audit team reportincompatibilities direct tocommiee.

Compliant . 2010/11 wasf inal ized. 2011/12 to be

nalized.

Compliant.

Compliant. NewCommittee took office on

January 1st 2012 and meetingsare scheduled.

Compliant.

Compliant. Meets monthly.

Compliant. Refer page 22

Compliant.

Compliant.

Ref code

8(2) d

8(2) e

8(2) f

8(2) g

8(2) i

8(2) k

8(2) l

8(2) m

8(2) n

8(2) o

8(2) p

8(2)q

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Risk Management Commiee

Consists of one Non Executive Director, CEO and keymanagement personnel.

Assess all risks on a monthly basis using risk indicators andMIS.

Review adequacy and effectiveness of all managementcommiees and the management of risks.

Take actions to mitigate the eects of specic risks if such risksare beyond the internal policy or regulatory limits.

Shall meet at least quarterly to assess risk management andBCP.

Submit risk assessment report within a week of each meetingfor board review and specic directions.

Establish compliance function with a Compliance Officerto report about compliance with laws, rules, regulations &directions etc…

Related part traacto – Pararaph 9

Board shall avoid any conict of interest from any transactionwith any person and particularly with persons considered asrelated parties. Board shall ensure that the Company does not engage

in transactions which would grant a related party “morefavourable treatment” than is accorded to other constituents.

Dclore - Pararaph 10

A statement to the eect that audited nancial statements areprepared in line with applicable accounting standards andregulatory requirements. A report by the Board that the nancial reporting system has

been designed to provide a reasonable assurance regardingthe reliability and the preparation of nancial statements is

in accordance with the relevant accounting standards andregulatory requirements.

Deree of complace

Compliant.

Compliant.

Compliant.

Compliant.

Compliant. Meets monthly

Compliant.

Compliant.

Compliant.

Compliant.



Ref code

8(3)

8(3)a

8(3)b

8(3)c

8(3)d

8(3)e

8(3)g

8(3)h

9(2)

9(4)

10(2) a

10(2) b

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Details of the Directors including names and transactions withthe company.

Fees and remuneration paid by the Company to the Directorsin aggregate.

Net accommodation outstanding in respect of each category

of related parties and net accommodation outstanding as apercentage of the nance company’s capital funds.

Aggregate values of remuneration paid and transactionswith its key management set out by broad categories such asremuneration paid, accommodation granted and deposits orinvestments

A report seing out details of compliance with prudentialrequirements, regulation, laws, internal controls and measuresto rectify non-compliances, if any.

The external auditors certication of compliance with the Act,rules and directions issued by the Monetary Board

Deree of complace




Compliant.Refer pages 63

Compliant. Directors, auditors,internal control, audit and riskcommittees and governancereports form part of thisrequirement.


Ref code

10(2) d

10(2) e

10(2) f

10(2) g

10(2) h

10(2) j

REMuMERATIOn COMMITTEE

The composition of the remumeration Commiee is given on page 04 The Commiee is mandated with theresponsibilities of determining the remumeration of working directors and senior managment , recruitment ofkey management personnel, determination and transmission of KPIs and monitor progression in the achievement.The Commiee extends its responsibilities to install a succession plan and organisation structure. The approval

of the annual increments and bonuses too come under the purview of the Commiee.

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audIT COmmITTEE rEpOrT

The audit commiee was re-constituted with the appointment of new Directors to the Board. The

members of the Commiee are given on page 04. The Commiee is headed by Mr. N.M. Pieris who

is a qualied accountant. All members of the Commiee are Non-Executive Directors.

M/S HLB Edirisinghe and Co – Chartered Accountants are the Internal Auditors of the Company.

The Internal Auditors liase with the Audit Commiee to assure governance in terms of both

performance and conformance. The audit work extends to all the business units, processes and

products. The Commiee approved the audit plan at the beginning of the year. The plan emphasizes

the assessment of the ecacy and eectiveness of internal control, nancial processes, compliance

with internal policies and procedures, IT governance, regulatory and statutory compliances,

budgetary performance among other areas. In compiling the audit plan and work the Commiee

took into consideration of the requirements set out in Central Bank direction No 3 of 2008 onCorporate Governance.

The new Commiee took oce only on 1st January 2012. An initiative that will be given more

emphasis would be the furtherance of ties with external auditors. The dialogue with external

auditors would be enriched by having regular meetings with a wider scope.

Commiee meetings are held monthly with Board Secretary functioning as the commiee secretary.

The commiee minutes are kept with secretary and circulated to members.

The company has operational manuals encompassing all functional areas and an employee

hand book to promote ethical business practices. These manuals are mainly aimed at avoiding

or mitigating operational risks. The audit reports, the responses by the relevant sectional head,audit review and re-conrmation of the corrective actions on ndings are overseen by the Audit

Commiee. The commiee has implemented a programme with strict time lines to assure adherence

in responding to audit ndings. During the year an exercise was carried out to nalise and roll out

procedure manuals/ employee hand book to each and every employee to promote awareness. The

manuals are updated regularly with the changes and approval of new policies.

The work of internal auditors are supplemented by the in-house group internal audit team. The

in house audit team conducts continuous and ad-hoc assignments mainly in business units which

are highly vulnerable to operational risks. Even the group internal audit team reports direct to

the Audit Commiee.

There is a monthly assurance report to the Board by the Finance Director conrming statutory andregulatory compliance, ecacy of internal control system, completeness and accuracy of records,

and in turn the nancial reports. This would lead to a reasonable assurance of the integrity and

true and fairness of nancial statements.

At present the Commiee meets monthly and internal audit reports, the responses and verication

of the corrective meassures are deliberated at length.

ATTEnDAnCE AT MEETing - JAnuARy 2012 OnwARDs

Meetings Held Meetings Present

Mr. N.M. Pieris 3 3

Mr. L.D. Peiris 3 3Mr. B. Ponnambalam 3 1

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rIsk maNagEmENT

Company has a Risk Management Commiee comprising Executive Directors and the other

operational heads with line responsibilities which is chaired by a Non-Executive Director. The

Commiee is entrusted with the responsibility of identication and eective management of risks.

Meetings of the Risk Commiee are held monthly and the members of the Commiee constantly

monitor and evaluate the eectiveness of the existing risk management processes. The potential

threats that could arise in the future and any further actions or modications to existing systems

are also constantly reviewed by the Commiee. The Commiee appreciates that risks form part

and parcel of business and therefore, the aim is to establish the framework to support business

growth whilst managing the associated risks.

1. MARkET Risk

Market risk indicates the susceptibility of the Company to the uctuations in market prices. Overall

revenue of the Company and in particular the net interest earnings have shown a commendable

growth highlighting the positive overall market conditions. In the case of lending activities the main

risk is the more frequent re-pricing of liabilities over assets which could turn disadvantageous in

a rising interest rates environment. This is constantly monitored by the Commiee with regular

revision of lending rates as the situation warrants. Although the market value of some of the

securities in the equity investment portfolio fell, drastic growth in the values of other securities in

the portfolio led to an increase in the value of the overall portfolio. The investments in the equity

market are very much below the regulatory limits and hence the exposure to any adverse market

movement is contained. The Company does not hold a trading portfolio of xed income securities.

All xed income investments of the Company are held till maturity and therefore, are stated at

net realizable value. The Company is mainly susceptible for the changes in market interest rates

and to a limited degree to the prices of various investments.

2. LiquiDiTy Risk

Liquidity risk highlights the risk arising from the failure or inability of the Company to meet the

repayment of liabilities in a timely manner. This arises mainly due to the mismatch between the

maturity periods of the liabilities and the corresponding assets held there by creating a possible

constrain for the Company. Liquidity risk management is particularly important in the nance business to assure credibility of the Company among the depositors and general public. A major

strength possessed by the Company to mitigate this risk is evident from the higher renewal ratio

of term deposits. Healthy growth in the term deposits base is also proof of the condence by

depositors which too augurs well in the management of liquidity risk. The statutory liquid assets

as requisitioned by the regulation were maintained with an additional buer. The Company has

adopted many promotional techniques to maintain the current deposit base and also to aract

new deposits. There is great emphasis on recoveries and to contain contracts which would go

into arrears with a view to preserving liquidity. Bank borrowings and securitization funding are

the other sources of cash inows to the Company. The maturities of these sources are generally

compatible with the investment period of the Company. The liquidity is expected to pose the biggest

challenge given the decline in market liquidity, intense rivalry among the nance companies to

aract deposits and also regulatory constraints on the credit expansion by banks.

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rIsk maNagEmENT

3. CREDiT Risk

The greatest of the credit risks assumed by the Company is the default risk. NPL (Non Performing

Loan) ratio is an important measure which highlights the credit risk representing the default or

non-payment of loans and advances by the customers. NPL ratio decreased to nearly 2.7 % during

the current nancial year in comparison to 3.1 % in the last year. The ratio has been declining

continuously for the last nine years from March, 2004. This ratio is the key indicator of credit

risk from a Balance Sheet perspective since credit investments account for 52% of the total assets.

The above outcome is the result of prudent and eective measures adopted by the Company

in recovery eorts and careful assessment of the creditworthiness of the customers. There is in

place a comprehensive credit manual which deals extensively with initiations, limits of authority,exposures, follow-up, recoveries and selement. We have focused our eorts to further improve

the ratio to a minimal level.

4. OPERATiOnAL Risk

Operational risks are associated with the ineciencies or failure of internal systems, processes or

failure of people to prevent and detect occurrence of material frauds and errors. The operational

risk may emerge due to deliberate manipulation of the accounting and other systems, the technical

weaknesses in the systems and controls and also lack of knowledge and ability in application

by the employees. The outcome would be losses and damages both nancial and reputational.

Various internal controls are in place at the Head Oce and also in the branches and Gold Loan

Centers to ensure that those controls are adhered to and errors and likely frauds are kept on check.

These measures have so far been proven to be eective and enabled the company to maintain

risk exposure at a minimal level. The operational risks could be the result of unexpected external

events too. Such Events which are not fully controllable by the Company may cause detrimental

eect to the protability, cash and possibly to reputation.

Even the regulatory and reputational risks stemming from non compliances with laws and

regulatory requirements are included under operational risk. The Company to the best of its

knowledge and eort is in compliant with all the statutory and regulatory requirements. These

compliances are subject to review by the compliance team headed by the Compliance Ocer andvarious Commiees.

The operational risk mitigation mechanism would involve system and process improvements,

established policies and procedures, employee training and obtaining cover for insurable losses.

The Company has comprehensive operational manuals extending to all processes, products and

business units. A Business Continuity Plan (BCP) is available with the detail steps in restoring

the operations in the event of a sudden partial or total discontinuity of operations. The Disaster

Recovery Plan (DRP) is tested regularly to minimize the risk of system down time. The Company

employs the group audit team and Internal Auditors M/S H L B Edirisnghe & Co for assurance of

substantial compatibility between actual operations and internal policies and procedures.

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aNNual rEpOrT Of ThE

BOard Of dIrECTOrs

It is with pleasure that the Directors present their Report to the Members with the Audited Accounts of the Companyof Arpico Finance Company PLC for the nancial year ended 31st March 2012.

BOARD OF DIRECTORS - STRuCTuRE

In the year under review changes were eected to the Board of Directors in order to be compliaant with theCorporate Governance Direction No. 3 of 2008. Thereby the Chairman, Mr. J.E.P.A. De Silva resigned from theBoard in December 2011 and Mr. B. Ponnambalam was appointed as Chairman from January 2012.

The Deputy Chairman, Mr. D.L.S.R. Perera and Non Executive Director, Mr. R.K.E.P. De Silva resigned in December2011. Mr. N.M. Pieris was appointed to the Board in January 2012.

Our present Board of Directors is given on page 03.

pRInCIpAL ACTIvITIES

The principal Lines of Business are Hire Purchase, Leasing, Term Loans, Consumer Durable Loans, Gold Loansand Real Estate.

OpERATIOnAL REvIEW

This is coverd under a special report which appears on pages 09 to 11. RISk MAnAgEMEnT REvIEW

A detailed report on the risks appears on page 23 to 24 of the Annual Report.

CORpORATE gOvERnAnCE

This subject has been dealt with separately in the Annual Report and is on pages 15 to 21.

BOARD COMMITTEES

Adt Commee

This subject is dealt with in detail on page 22.

Remerato Commee

This subject is dealt with under Corporate Governance.

Reslts ad Aroriatios

year eded31.03.2012

Rs.

1,006,245,657

51,854,496(19,809,546)

32,044,949

85,042,8045,700,000

-(8,925,000)

113,862,753

(6,408,990)(5,887,267)

(40,000)101,526,496

Year ended31.03.2011

Rs.

912,853,194

32,793,579(11,133,925)

21,659,654

74,737,358

(1,838,209)(4,462,500)90,096,303

(5,013,499)-

(40,000)85,042,804

TuRnOvER

Prot Before Income TaxTaxationNet Prot for the year

Add: Retained Prot brought forward from previous yearAdditional depreciation on revaluation

Less: Prior Year adjustmentLess: Oridnary Dividend PaidProt available for appropriation

Your Directors recommend the following appropriations;

Transfer to Reserve Fund (20% of prot aer Tax)Transfer to Investment FundDividend on 8% Irredeemable Cumulative Preference SharesRetained Prot carried forward

(Restated)

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DIvIDEnDS

The Board of Directors have recommended a First and Final Dividend of Rs. 2/- per share. The Directors conrmthat the Company satises the solvency test set out in Section 56 of the Companies Act No.7 of 2007. The Certicateof Conrmation was obtained from the Auditors in respect of the recommended dividend.

RESERvES

The Directors have transferred a sum of Rs. 6,408,999/- to the Reserve Fund and the total Reserves includingRetained Prot now stand at Rs. 278,854,724/-.

RATIng

RAM Ratings Lanka Limited has assigned our Company a long term nancial institution rating of BB.

STATED CApITAL

The Stated Capital of the Company as at 31st March 2012, is Rs. 96,312,500/- represented by 4,462,500 OrdinaryShares and 50,000 Irredeemable Preference Shares.

ShAREhOLDERS’ InFORMATIOn

The detailed Shareholders’ information appears on Pages 28 and 29 of the Annual Report.

TWEnTy MAjOR ShAREhOLDERS

The names and number of shares held by the 20 major shareholders appear on page 29.

puBLIC hOLDIng

The public holding percentage appears on page 28.

ShARE InFORMATIOn

Information with regard to Dividend per Share, Dividend Pay Out, Net Asset Value per share and Market Valueper share appear with the Ten Year Summary on page 68.

DIRECTORS

Mr. B. Ponnambalam, Mr. N.M. Peiris joined the Board as Independent Non Executive Director w.e.f. 1st January, 2012.

DIRECTORS’ InTEREST In COnTRACTS

Directors’ interests in contracts of the Company have been set out in the Notes to the Accounts. These interests have been disclosed at Directors’ Meetings. They have no direct or indirect interest in any other existing or proposedcontract with the Company.

RE-ELECTIOn OF DIRECTORS

Mr. W.J.D.B.L. Jayalath retires by rotation under Articles numbered 130 and 131 of the Company and being eligible oers himself for re-election with the unanimous support of the Directors.

Mr. B. Ponnambalam retires under Article Number 135 and being eligible oers himself for re-electionwith the unanimous support of the Directors.

Mr. N.M. Pieirs retires under Article Number 135 and being eligible oers himself for re-election withthe unanimous support of the Directors.

aNNual rEpOrT Of ThE BOard Of dIrECTOrs

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aNNual rEpOrT Of ThE BOard Of dIrECTOrs

EMpLOyEE ShARE OWnERShIp

The Company has not implemented an Employee Share Ownership scheme.

pROpERTIES OF ThE COMpAny

Land and Building of the Company were last revalued by professionaly qualied independent valuers

A Y Daniel and Sons on 31st March 2012.

The Registered Finance Companies are allowed to carry out revaluation of their land and buildings every

seven years and treat 50% of the surplus as supplementary capital in the Tier II Capital Base.

DOnATIOnS

The Company donated a sum of Rs. 289,250/- during the year under review.

AuDITORS

The Auditors, M/s. SJMS Associates Chartered Accountants, have audited the accounts as at

31st March 2012. The re-appointment rests in your hands and they have oered their services at an allinclusive fee of Rs. 675,000/- for the ensuing year.

(Sgd.)

By Order of the Board of Directors

ALLIAnCE MAnAgEMEnT SERvICES (pvT) LTD.

Secretaries

28th June 2012

DIRECTORS’ REMunERATOn

The Directors’ remuneration is disclosed under Note 39.1 to the Financial Statements.

31.03.2011nAME 31.03.2012

Directors’ Sareoldis

Mr B. Ponnambalam

Mr. Bede Jayalath

Mrs. R. E. Weerasinghe

Mr Lyle D. PeirisMr N. M. Peiris

-

11,100

2,709

--

100

11,100

2,709

100100

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sharEhOldErs’ INfOrmaTION

DISTRIBuTIOn OF ShARE hOLDIng

A at 31t March 2011

Total

Share Holding

140199

335648

847247

1329365

1810041

4462500

No. of

Shareholders

575

112

24

3

1

715

holdis Rae

(no. of share)

1 - 1000

1001 - 10000

10001 - 100000

100001 - 1000000

1000001 & Over

Percentage of

Holding %

3.14

7.52

18.99

29.79

40.56

100.00

A at 31t March 2012

The shares in the hands of the public as at 31st March 2012 were 1,762,231 representing 34.77% of the

Odinary Shares in Issue and as at 31st March 2011 there were 1,551,862 shares representing 34.78% of

the Odinary Shares in Issue.

Total

Sare holdi

112,769

295,954

841,200

1,402,536

1,810,041

4,462,500

no. of

Sareolders

522

93

25

4

1

645

Percetage of

holdi %

2.53

6.63

18.85

31.43

40.56

100.00

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sharEhOldErs’ INfOrmaTION

A s a t 3 1 s t M a r c h 2 0 1 1

T W E n T y M A j O

R S h A R E h O L D E R S

N o .

N a m

e o f S h a

r e h o l d e r

N o . o f

S h a r e s

%

A s a t 3 1 s t M a r c h 2 0 1 2

4 0 . 5 6

1 9 . 5 2

6 . 6 7

3 . 5 9

1 . 9 9

1 . 8 5

1 . 8 6

1 . 5 8

1 . 5 0

1 . 2 7

1 . 2 0

1 . 1 8

1 . 0 7

1 . 0 1

0 . 5 6

0 . 5 2

0 . 4 1

0 . 3 9

0 . 3 2

0 . 2 9

1 2 3 4 5 6 7 8 9 1 0

1 1

1 2

1 3

1 4

1 5

1 6

1 7

1 8

1 9

2 0

4 0 . 5

6

1 9 . 5

3

6 . 6

0

5 . 3

0

1 . 9

9

1 . 8

5

1 . 8

6

1 . 5

8

1 . 5

0

1 . 3

8

1 . 2

7

1 . 2

0

1 . 0

7

0 . 5

6

0 . 5

2

0 . 5

3

0 . 4

1

0 . 3

9

0 . 3

9

0 . 3

2

1 , 8 1 0 , 0 4 1

8 7 1 , 7 2 7

2 9 4 , 4 9 5

2 3 6 , 3 1 4

8 8 , 6 6 5

8 2 , 6 7 7

8 2 , 8 0 0

7 0 , 4 9 5

6 7 , 0 0 0

6 1 , 5 0 0

5 6 , 6 8 4

5 3 , 5 8 3

4 7 , 8 0 0

2 5 , 0 2 2

2 3 , 0 8 5

2 3 , 5 5 3

1 8 , 2 4 8

1 7 , 5 1 0

1 7 , 4 0 0

1 4 , 4 7 1

N o .

N a m

e o f S h a r e h

o l d e r

N o . o f

S h a r e s

%

1 2 3 4 5 6 7 8 9 1 0

1 1

1 2

1 3

1 4

1 5

1 6

1 7

1 8

1 9

2 0

A l n c o I n s u r a n c e B r o k e r s ( P v t ) L t d .

A l l i a n c e F i n a n c e C o . P L C

M r . K . D . D . P e r e r a

M r . J . R . d e S i l v a

M r . R . K . E . P . d e S i l v a

O r i e n t H o t e l s L t d .

M r . S . A b i s h e k

M r . O . D . L i y a n a g e

M r . M . A . H . E s u f a l l y

D r . ( M r s . ) K . G . G . S . L . P e r e r a

M r . J . E . P . A . d e S i l v a

M r . A . P . A r u m u g a m p i l l a i

M r . G . C . W . d e S i l v a

E l g i n I n v e s t m e n t s L t d .

M r s . S . R . L . M a r c e l l i n e

A l l i a n c e T r a v e l S e r v i c e s L t d .

M r s . R . M . V . d e F o n s e k a

A l l i a n c e T e c h T r a d i n g ( P

v t ) L t d .

M r s . E . S . S e n e v i r a t n e

M r s . S . E . C a n e k e r a t n e

A l n c o I n s u r a n c e B r o k e r s ( P v t ) L t d .

A l l i a n c e F i n a n c e C o . P L C

M r . K . D . D . P e r e r a

D a w i I n v e s t m e n t T r u

s t ( P v t ) L t d .

M r . R . K . E . P . d e S i l v a

O r i e n t H o t e l s L t d .

M r . S . A b i s h e k

M r . O . D . L i y a n a g e

M r . M . A . H . E s u f a l l y

M r . A . P . A r u m u g a m p

i l l a i

D r . ( M r s . ) K . G . G . S . L .

P e r e r a

M r . J . E . P . A . d e S i l v a

E s t . o f t h e M r . G . C . W . d e S i l v a

M r s . S . R . L . M a r c e l l i n e

A l l i a n c e T r a v e l S e r v i c e s L t d .

M r . J . R . d e S i l v a

M r s . R . M . V . d e F o n s e

k a

A l l i a n c e T e c h T r a d i n g ( P v t ) L t d .

E l g i n I n v e s t m e n t s L t

d .

M r s . E . S . S e n e v i r a t n e

1 , 8 1 0 , 0 4 1

8 7 1 , 1 2 7

2 9 7 , 4 9 5

1 6 0 , 1 4 3

8 8 , 6 6 5

8 2 , 6 7 7

8 2 , 8 0 0

7 0 , 4 9 5

6 7 , 0 0 0

5 6 , 6 8 4

5 3 , 5 8 3

5 2 , 5 0 0

4 7 , 8 0 0

4 5 , 0 0 0

2 5 , 0 2 2

2 3 , 0 8 5

1 8 , 2 4 8

1 7 , 5 1 0

1 4 , 4 7 1

1 2 , 7 4 8

7/30/2019 362_1343385160



BOard rEpOrT ON INTErNal CONTrOls

Internal control, in the given context, is meant, amongst other things to accomplish the following purposes

1. Eciency and eectiveness of systems and operations as a whole.

2. Identication and management of risks, especially, the operational risks.

3. Reasonable assurance about the reliability of nancial reports and management information and

the preparation of nancial reports which meet the requirements of Statutes, applicable accounting

standards and regulations.

4. Compliance with relevant laws, regulations and directions.

The Board of Directors and the management of the entity have to ensure the implementation of an appropriate internal

control mechanism for the above purposes. Whilst ensuring that the systems and processes operate economically,the internal control mechanism should safeguard the resources which would lead to the achievement of objectives.

The Board has implemented requisite prudential requirements as a means to accomplish a sound internal

control mechanism. It has established procedure manuals encompassing all processes, employee hand book,

business continuity and disaster recovery plans, reconciliations and control systems, set limits of authority

for key management etc. These help to detect and prevent errors and frauds. The eectiveness, adequacy,

compatibility with best practices and accompanying modications are constantly veed by internal, external

auditors and group audit team. This evaluation process is initiated through the annual internal audit plan

which is extensively deliberated and approved by the Board. Once implemented, the audit plan will result in

the appraisal of the actual operations of each process vis-à-vis the procedure manual. The reports which are

the outcome of the audits are evaluated, mainly, by the audit commiee to ascertain any reported deviationsfrom the set procedures and to recommend improvements. There are various other Board and management

commiees appointed under the aegis of the Board to evaluate the ecacy of systems and controls. The risk

commiee assesses the operational risks in each product and process as a result of any deciencies arising

from internal controls and systems as part of the standing items in the agenda. The Board is apprised of the

ndings of commiees by circulation of minutes and a brief presentation by commiee chairs. There is direct

follow up by the Board with respect to implementation of recommendations with a view to continuously

improve the internal control mechanism.

The external auditors review the nancial reporting system and nancial statements. This is with a

view to conrm compliance with applicable accounting standards, rules and regulations and to assure

a reasonable degree of reliability. Reports which are part and parcel of the annual report also provideinformation pertaining to ecacy of internal controls.

Given the ndings, the Board is of the view that to the best of its knowledge and belief, there is a reasonable

assurance of the soundness of internal control mechanism.

Bede Jaalath

Finance Director

h Radi

Managing Director

28th June 2012

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The Directors’ responsibilities in relation to Financial Statements are set out in this report. The external auditors’

responsibilities in relation to Financial Statements are set out in Auditors’ Report. The Companies Act No 7 o 2007

requires the Directors to prepare the Financial Statements or each nancial year giving a true and air view o the

state o aairs o the Company as at end o the nancial year and o the prot or loss o the Company or the year

thus ended. In preparation o the Financial Statements or the year appropriate accounting policies have been selected

and applied consistently, reasonable and prudent judgments and estimates have been used and applicable accounting

standards have been ollowed.

The Directors, thereore, conrm that the Financial Statements o the Company which comprise o the audited income

statement or the nancial year ended 31st March, 2012 and the Balance Sheet as at the said date give a true and air

view o the state o aairs o the Company.

The Directors are responsible or ensuring that the Company keeps sucient accounting records to disclose with

reasonable accuracy the nancial position o the Company and or ensuring that the nancial statements have been

prepared and presented in accordance with the Sri Lanka Accounting Standards and provide the inormation required

by the Companies Act No 7 o 2007. They are also responsible or taking reasonable measures to saeguard the assets

o the Company, and in that context to have a proper regard to the establishment o appropriate systems o internal

control with a view to prevent and detect raud and other irregularities.

The Directors continue to adopt the going concern basis in preparing accounts. The Directors, ater making inquiries

and ollowing a review o the Company’s budget or 2012/13 including cash fows and borrowing acilities, consider

that the Company has adequate resources to continue in operation.

By Order o the Board o Directors

ALLIANCE MANAGEMENT SERVICES (PRIVATE) LIMITED

Secretaries

28th June 2012

sTaTEmENT Of dIrECTOrs’ rEspONsIBIlITIEs IN

rElaTION TO fINaNCIal sTaTEmENTs

7/30/2019 362_1343385160



ChIEf ExECuTIvE OffICEr’s aNd ChIEf fINaNCIal OffICEr’s

rEspONsIBIlITy sTaTEmENT

The Financial Statements of Arpico Finance Company PLC are prepared in compliance with the Sri

Lanka Accounting Standards issued by the Institute of Chartered Accountants of Sri Lanka and the

requirements of the Companies Act, No 7 of 2007 and any other applicable statutes. The accounting

policies used in the preparation of the nancial statement are appropriate and are consistently

applied, except unless otherwise stated in the notes accompanying the nancial statements.

The Board of Directors and the management of our company accept responsibility for the integrity

and objectivity of these nancial statements. The estimates and judgments relating to the nancial

statements were made on a prudent and reasonable basis, in order that the nancial statements

reect in a true and fair manner, the form and substance of transactions, and reasonably present

the company’s state of aairs. To ensure this, the company has taken proper and sucient care

in installing a system of internal control and accounting records, for safeguarding assets, and for

preventing and detecting frauds as well as other irregularities, which is reviewed, evaluated and

updated on an ongoing basis. Our internal auditors have conducted periodic audits to provide

reasonable assurance that the established policies and procedures of the company were consistently

followed. However, there are inherent limitations that should be recognized in weighing the

assurances provide by any system of internal controls and accounting.

The Financial Statements were audited by M/s SJMS Associates Chartered Accountants, the

independent auditors.

The audit commiee of our Company meets periodically with the internal auditors and the

independent auditors to review the manner in which these auditors are performing their

responsibilities, and to discuss auditing, internal control and nancial reporting issues. To ensure

complete independence, the independent auditors and the internal auditors have full and free

access to the members of the audit commiee to discuss any maer of substance.

h Radi

Managing Director

28th June 2012

Bede Jaalath

Finance Director

7/30/2019 362_1343385160



Reort o te Fiacial Statemets

We have audited the accompanying financialstatements of Arpico Finance Company PLC, whichcomprise the balance sheet as at 31st March 2012, andthe income statement, statement of changes in equityand cash ow statement for the year then ended, anda summary of signicant accounting policies andother explanatory notes.

Maaemet’ Repoblt for the FacalStatemets

Management is responsible for the preparation andfair presentation of these nancial statements inaccordance with Sri Lanka Accounting Standards.The responsibility includes: designing, implementingand maintaining internal control relevant to thepreparation and fair presentation of financialstatements that are free from material misstatements,whether due to fraud or error; selecting and applyingappropriate accounting policies; and makingaccounting estimates that are reasonable in thecircumstances.

scope of Adt ad Ba of Opo

Our responsibility is to express an opinion onthese nancial statements based on our audit. Weconducted our audit in accordance with Sri LankaAuditing Standards. Those standards require thatwe plan and perform the audit to obtain reasonableassurance whether the nancial statements are freefrom material misstatements.

An audit includes examining, on a test basis,evidence supporting the amounts and disclosuresin the nancial statements. An audit also includes

TO ThE ShAREhOLDERS OF ARpICO FInAnCE COMpAny pLC

INdEpENdENT audITOr’s rEpOrT

assessing the accounting principles used andsignificant estimates made by management, aswell as evaluating the overall nancial statementpresentation.

We have obtained all the information and explanationswhich to the best of our knowledge and belief werenecessary for the purposes of our audit. We therefore

believe that our audit provides a reasonable basisfor our opinion.

Oiio

In our opinion, so far as appears from our examination,the Company maintained proper accounting recordsfor the year ended 31st March 2012 and the nancialstatements give a true and fair view of the Company’sstate of aairs as at 31st March 2012 and of its protand cash ows for the year then ended in accordancewith Sri Lanka Accounting Standards.

Reort o Oter Leal Reqiremets

These nancial statements also comply with therequirements of Section 151(2) of the Companies Act

No. 7 of 2007 and the requirements of the FinanceBusiness Act No. 42 of 2011.

SJMS ASSOCIATESChartered AccountantsColombo28th June 2012

P. E. A. Jayewickreme, M. B. Ismail,Ms. A. M. J. Patrick, T. Krishnakumar, Ms. S. L. Jayasuriya, D. S. W. Andradi,

G. J. David, Ms. F. M. Marikkar, Ms. M. S. J. Henry, Ms. A. U. M. Keppetipola,R. H. M. Minfaz, Ms. S. Y. Kodagoda

7/30/2019 362_1343385160



Icome

Interest Income

Interest Expenses

Net Interest Income

Trading Prot

Other Income

Operat Expee

Personnel Costs

Premises, Equipment and Establishment Expenses

Provision for Sta Retirement Benets

Loan Losses & Provisions

Other Expenses

Operat Prot Before VAT o Facal servce

ad icome Tax

Share of Prot from Associate Company

Prot Before VAT o Facal servce ad icome Tax

VAT on Financial Services

Prot Before icome Tax

Taxation

net Prot for the year

Basic / Diluted Earnings per Share

Dividend per Ordinary Share

note

4

5

6

7

8

9

10

11

12

13

2011/2012

Rs.

523,625,172

471,127,348

(235,297,862)

235,829,486

14,796,026

37,701,798288,327,310

100,558,852

76,463,635

6,294,910

12,761,207

38,012,039

234,090,643

54,236,667

5,576,454

59,813,121

(7,958,625)

51,854,496

(19,809,546)

32,044,949

7.17

2

Restated

2010/2011

Rs.

425,066,837

380,241,149

(204,878,633)

175,362,516

(11,944)

44,837,632220,188,204

75,196,528

61,935,836

5,718,468

14,240,726

19,993,936

177,085,494

43,102,710

1,789,253

44,891,963

(12,098,384)

32,793,579

(11,133,925)

21,659,654

4.84

2

INCOmE sTaTEmENT

Thesignicantaccountingpoliciesandnotesfrom1to41formanintegralpartofthesenancialstatements.

FOR THE YEAR ENDED 31ST MARCH 2012

7/30/2019 362_1343385160



Assets

Cash and bank balances

Treasury bills and bonds

Placement with banks and other nancial institutionsCommercial Papers

Dealing securities

Inventories

Loans and advances to customers

Net investment in lease

Other receivables

Income tax refund due

Investment securities

Investment in associate company

Deferred taxation

Property and equipment

Intangible assets

Total Assets

Liabilities

Bank overdra

Customer deposits

Interest bearing borrowingsTrade and other payables

Retirement benet obligations

Total Liabilities

Et

Stated capital

Statutory reserve fund

Investment fund

Revaluation reserves

Capital equalisation reserve

Revenue reserves

Shareholders’ funds

Total Lablte ad Et

note

14

15

16

17

18

19

20

2122

23

24

25

26

27

28

29

3031

32

33

34

35

36

31.03.2012

Rs.

31,965,804

199,600,265

45,000,000

-

11,696,757

117,336,013

933,081,946

1,216,624,009

62,363,26426,377,570

28,035,931

10,179,419

19,274,408

168,998,737

1,474,623

2,872,008,746

28,651,573

1,699,257,579

584,879,680162,938,175

21,114,515

2,496,841,522

96,312,500

41,827,557

5,887,267

107,505,369

-

123,634,531

375,167,224

2,872,008,746

31.03.2011

Rs.

46,388,885

154,262,854

50,000,000

40,000,000

6,981,040

41,077,801

835,161,058

578,303,887

53,056,89020,585,031

27,420,452

5,041,715

46,114,325

113,588,530

2,190,895

2,020,173,363

-

1,251,714,232

311,128,684121,553,460

16,682,597

1,701,078,973

96,312,500

35,418,567

-

75,212,484

5,000,000

107,150,839

319,094,390

2,020,173,363

28th June 2012

BalaNCE shEET

I certify that these nancial statements also comply with the requirements of the Companies Act No. 07 of 2007.

The Board of Directors is reponsible for the preparation and presentation of these Financial Statements.Signed for and on behalf of the Board:


Fiace Maaer

Fiace DirectorMaai Director

AS AT 31ST MARCH 2012

Restated

7/30/2019 362_1343385160



B a l a n c e a s a t 0 1 s t A p r i l 2 0 1 0

N e t p r o t

f o r t h e p e r i o d

P r i o r p e r i o d a d j u s t m e n t ( N o t e 1 )

D i v i d e n d

o n -

O r d i n a r y s h a r e s

8 %

I r r e

d e e m

a b l e c u m

u l a t i v e

P r e

f e r e n c e s h

a r e s

P a i d d u r i n

g t h e y e a r

T r a n s f e r s d u r i n g t h e y e a r

B a l a n c e a s a t 3 1 s t M a r c h 2 0 1 1

N e t P r o t

f o r t h e p e r i o d

D e f e r r e d

t a x

a d j u s t m

e n

t r e

l a t i o n g

t o r e v

a l u a t i o n

o f

b u i d i n g i n

P r i o r p

e r i o

d s

S u r p

l u s o n r e v

a l u a t i o n

D e f e r r e d t a x r e l a t i n g t o r e v a l u a t i o n o f b u i l d i n g i n c u r r e n t

y e a r

D e e r e d t

a x r e l a t i n g t o a d d i t i o n a l d e p r e c i a t i o n

T r a n s f e r o

f a d d i t i o n

a l d e p r e c i a

t i o n

o n

R e v

a l u a t i o n

D i v i d e n d

o n -

O r d i n a r y s h a r e s

8 %

I r r e

d e e m

a b l e c u m

u l a t i v e

P r e

f e r e n c e s h

a r e s

P a i d d u r i n

g t h e y e a r

T r a n s f e r s d u r i n g t h e y e a r

B a l a n c e a s a t 3 1 s t M a r c h 2 0 1 2

5 0 0 , 0

0 0

-

-

-

-

-

-

5 0 0 , 0

0 0

-

-

-

-

-

-

-

-

-

-

5 0 0 , 0

0 0

P r e f e r e n c e

S h a r e s

R s .

s t a t u t o r y

R e e r v e

F u n d

R s .

R e v a l u a t o n

R e e r v e

R s .

C a p i t a l

E q u a l i s a t i o n

R e e r v e

R s .

D v d e n d

E q u a l i s a t i o n

R e e r v e

R s .

R e t a i n e d

p r o t

R s .

T o t a l

R s .

g e n e r a l

R e e r v

e

R s .

3 0 , 4

0 5 , 0

6 8

-

-

-

-

-

5 , 0

1 3 , 4

9 9

3 5 , 4

1 8 , 5

6 7

-

-

-

-

-

-

-

-

-

6 , 4

0 8 , 9

9 0

4 1 , 8

2 7 , 5

5 7

7 5 , 2

1 2 ,

4 8 4

-

-

-

-

-

-

7 5 , 2

1 2 ,

4 8 4

-

( 4 , 8

4 4 , 6

9 6 )

4 8 , 9

5 7 ,

7 5 1

( 7 , 7

2 3 , 1

7 0 )

1 , 6

0 3 ,

0 0 0

( 5 , 7

0 0 , 0

0 0 )

-

-

-

-

1 0 7 , 5

0 5 ,

3 6 9

1 0 ,

0 0 0 , 0

0 0

-

-

-

-

( 5 , 0

0 0 ,

0 0 0 )

-

5 ,

0 0 0 , 0

0 0

-

-

-

-

-

-

-

-

( 5 , 0

0 0 ,

0 0 0 )

-

-

2 2 ,

0 3 5

, 5 3 5

-

-

-

-

-

-

2 2 ,

0 3 5

, 5 3 5

-

-

-

-

-

-

-

-

-

-

2 2 ,

0 3 5

, 5 3 5

7 2 , 5

0 0

-

-

-

-

-

-

7 2 , 5

0 0

-

-

-

-

-

-

-

-

-

-

7 2 , 5

0 0

7 4 , 7

3 7 , 3

5 8

2 1 , 6

5 9 , 6

5 4

( 1 , 8

3 8 , 2

0 9 )

( 4 , 4

6 2 , 5

0 0 )

( 4 0 , 0

0 0 )

-

( 5 , 0

1 3 , 4

9 9 )

8 5 , 0

4 2 , 8

0 4

3 2 , 0

4 4 , 9

4 9

-

-

-

-

5 , 7

0 0 , 0

0 0

( 8 , 9

2 5 , 0

0 0 )

( 4 0 , 0

0 0 )

-

( 1 2 , 2

9 6 , 2

5 7 )

1 0 1 , 5

2 6 , 4

9 6

3 0 8 , 7

7 5 , 4

4 5

2 1 , 6

5 9 , 6

5 4

( 1 ,

8 3 8 , 2

0 9 )

( 4 ,

4 6 2 , 5

0 0 )

( 4 0 , 0

0 0 )

( 5 ,

0 0 0 , 0

0 0 )

-

3 1 9 , 0

9 4 , 3

9 0

3 2 , 0

4 4 , 9

4 9

( 4 ,

8 4 4 , 6

9 6 )

4 8 , 9

5 7 , 7

5 1

( 7 ,

7 2 3 , 1

7 0 )

1 , 6

0 3 , 0

0 0

-

( 8 ,

9 2 5 , 0

0 0 )

( 4 0 , 0

0 0 )

( 5 ,

0 0 0 , 0

0 0 )

-

3 7 5 , 1

6 7 , 2

2 4

sTaTEmENT Of ChaNgEs IN EquITy

N o t e 1

- P r e v i o u s y e a r g u r e s h a v e b e e n r

e s t a t e d d u e t o c o r r e c t i o n i n t h e p r o t s h a r e o f a s s o c i a t e c o m p a n y .

T h e s i g n i c a n t a c c o u n t i n g p o l i c i e s a n d n o t

e s f r o m

1 t o 4 1

f o r m

a n i n t e g r a l

p a r t

o f t h e s e n a n c i a l s t a t e m e n t s .

O r d n a r y

S h a r e s

R s .

9 5 , 8

1 2 , 5

0 0

-

-

-

-

-

-

9 5 , 8

1 2 , 5

0 0

-

-

-

-

-

-

-

-

-

-

9 5 , 8

1 2 , 5

0 0

S t a t e d C a p i t a l


i n v e t m e n t

F u n d

R s .

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

5 , 8

8 7 ,

2 6 7

5 , 8

8 7 ,

2 6 7

R e s t a t e d

7/30/2019 362_1343385160



2011/2012

Rs.

474,022,104

(239,713,614)

48,218,041

(198,174,492)

84,352,039

(337,412)(759,994,317)

(77,593,040)

447,543,348

25,654,110

(280,375,272)

(7,277,964)

(287,653,236)

3,651,543

438,7506,565,964

(11,724,916)

(14,178,755)

(15,247,414)

505,000,000

(231,249,004)

(5,000,000)

(8,925,000)

259,825,996

(43,074,654)

46,388,885

3,314,231

3,314,231

3,314,231

2010/2011

Rs.

372,833,001

(204,270,799)

37,015,077

(155,113,294)

50,463,985

(109,274,797)(308,982,552)

(14,727,448)

248,371,601

16,486,208

(117,663,003)

(6,985,788)

(124,648,791)

2,647,335

351,00057,706,741

(51,079,455)

(12,621,816)

(2,996,195)

349,036,672

(210,398,194)

(5,000,000)

(4,462,500)

129,175,978

1,530,992

44,857,893

46,388,885

46,388,885

46,388,885

Cah o from Operat Actvte

Interest Receipts

Interest Payments

Receipts from Other Operating Activities

Cash Payments to Employees and Suppliers

Operating Cash Flow Before Changes in Operating Assets

(icreae)/Decreae Operat Aet:

Treasury Bill & Bond/ Fixed Deposits and Commercial PapersFunds Advanced to Customers

Others

icreae/(Decreae) Operat Lablte:

Deposits

Others

net Cah from Operat actvte before icome Tax

Tax Paid

net Cah io/(Oto) from Operat Actvte

Cah Flo from ivet Actvte

Dividends Received

Ordinary Dividends Received from AssociateProceeds from Sale of Securities

Purchase of Securities

Purchase of Property and Equipment

net Cah io/(Oto) from ivet Actvte

Cah Flo from Fac Actvte

Proceeds from Borrowings

Repayment of Borrowings

Redeemed of Capital Equalisation Reserve

Dividends Paid

net cah io/(Oto) from Fac Actvte

Net Increase/(Decrease) in Cash and Cash Equivalents

Cash and Cash Equivalents at the Beginning of the Year

Cash and Cash Equivalents at end of the Year

Cah ad Cah Evalet Compre

Cash and Bank Balances and Bank overdra

Cash flOw sTaTEmENT



7/30/2019 362_1343385160



NOTEs TO ThE fINaNCIal sTaTEmENTsFOR THE YEAR ENDED 31ST MARCH 2012

1 gEnERAL InFORMATIOn

1.1 Report Ett

Arpico Finance Company PLC (“the Company”) is a public company incorporated on 1st May 1951 anddomiciled in Sri Lanka. The Company is re-registered under the new Companies Act No. 07 of 2007 andregulated under the Finance Companies Act No. 78 of 1988. Its registered oce and principal placeof business is located at No: 146, Havelock Road, Colombo 05. The ordinary shares of the Companyhave a primary listing in the Colombo Stock Exchange.

1.2 Prcpal Be Actvte

1.2.1 Compa

The principal business activities of the company are accepting public deposits, lending money for facilitiesincluding leases, hire purchases, loans, pawning activities and engages in other trading activities suchas real estate business, and dealing in securities.

1.2.2 Aocate Compa

The principal business activity of the associate company is insurance brokeringservices.

2 PREPARATiOn OF FinAnCiAL sTATEMEnTs

2.1 statemet of Complace

The balance sheet, income statement, changes in equity and cash ows, together with accountingpolicies and notes to the nancial statements have been prepared in accordance with Sri LankaAccounting Standards (SLAS) issued by the Institute of Chartered Accountants of Sri Lanka andthe requirements of the Companies Act No: 07 of 2007.

1.2.3 Date of Athorzato for e

The nancial statements of the company for the year ended 31st March 2012 were authorized for issue by the directors on 28th June 2012.

2.2 Ba of Preparato

The nancial statements have been prepared on the historical cost basis except for the revaluation ofcertain non-current assets and dealing securities. Historical cost is generally based on the fair value ofthe consideration given in exchange for assets.”

2.3 Fctoal ad preetato crrec

These nancial statements are presented in Sri Lankan Rupees which is the Company’s functionalcurrency unless otherwise stated.

2.4 go Cocer

The directors have made an assessment of the company’s ability to continue as a going concern andthey do not intend either to liquidate or to cease trading.

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NOTEs TO ThE fINaNCIal sTaTEmENTs

2.5 Comparatve iformato

Previous year gures have been re-classied whereever necessary, to conform to the current year’spresentation.

2.6 scat Accot Etmate ad Ampto

In the selection and application of the Company’s accounting policies the management isrequired to make judgments, assumptions and use assumptions that aect items reported inthe nancial statements. These estimates are based on management’s knowledge of currentfacts and circumstances, and assumptions based on such knowledge and expectations offuture events. Actual results may always dier from such estimates.

Revisions to accounting estimates are recognized in the period in which the estimate is revised or in theperiod of the revision and future periods, only if the revision aects both current and future periods.

The following are those items that the directors consider particularly susceptible to changes in estimatesand assumptions.

Item Policy Revaluation of property 3.5Impairment of non nancial assets 3.7Depreciation of property and equipment 3.5Deferred taxes 3.13.2

3 signiFiCAnT ACCOunTing POLiCiEs

3.1 Facal ivetmet

3.1.1 Deal secrte

Dealing securities are marketable securities listed on the Colombo Stock Exchange acquired and heldwith the intention of resale over a short period. These investments are carried in the balance sheet atthe lower of cost and market value, determined on aggregate portfolio basis in total.

3.1.2 ivetmet secrte

Investment securities are carried in the balance sheet at cost, which includes incidental costs ofacquisition, less provision for any permanent diminution in value. The provision for permanentdiminution in value is determined on an individual investment basis.

3.1.3 secrte old der Reprchae Areemet (‘Repo’)

This relates to treasury bills and bonds sold subject to a commitment to repurchase them at apredetermined price. Such treasury bills and bonds remain on the balance sheet and the liabilityis recorded in respect of the consideration received. The liability is disclosed as “borrowingsunder repurchase agreements”. These treasury bills and bonds are not marked to market andthe corresponding liability is also not marked to market.

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3.1.4. ivetmet Aocate Compa

The results of associate are incorporated in these nancial statements using the equity method ofaccounting, except when the investment is classied as held for sale, in which case it is accountedfor in accordance with SLAS 38 Non-Current assets held for sale and discontinued operations.Under the equity method, investment in associate is carried in the Company’s balance sheet at costas adjusted for post-acquisition changes in the Company’s share of the net assets of the associate,less any impairment in the value of individual investments. Losses of an associate in excess of theCompany’s interest in that associate (which includes any long-term interests that, in substance, formpart of the Company’s net investment in the associate) are not recognized, unless the Company hasincurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identiableassets, liabilities and contingent liabilities of the associate recognized at the date of acquisition asgoodwill. The goodwill is included within the carrying amount of the investment and is assessed forimpairment as part of the investment. Any excess of the Company’s share of the net fair value of theidentiable assets, liabilities and contingent liabilities over the cost of acquisition, aer reassessment,is recognized immediately in prot or loss.

When the Company transacts with an associate, prots and losses are eliminated to the extent of theCompany’s interest in the relevant associate.

Financial statements of the associate are prepared for a common nancial year, which ends on 31stMarch.

3.2 ivetore

3.2.1 Real Etate

Real estates represent land acquired for development and resale. These are carried at the lower of costand net realizable value. Cost include the purchase price and legal expenses and subsequent expenditureincurred on development cost is determined by assigning the direct cost arising specic identicationapproach..

3.2.2 Vehcle

Vehicles acquired for leasing to customers and are carried at the lower of cost or net realizablevalue.

3.3.1 Loa ad advace

Loans and advances to customers represent loans and advances originated by the company and arerecognized when cash is advanced to borrowers. They are initially recorded at the amount disbursedand subsequently reduced by provision for uncollectible loans and advances. They are de-recognizedwhen either borrower repays their obligations, or the loans are wrien-o, or substantially all the risksand rewards of ownership are transfered.

3.3.2 Falle De Retal of Leae

Fallen due rentals of lease represent the total sum of rentals fallen due for payment and le

unpaid.

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3.3.3 Hre Prchae Aet

Assets hired to customers under hire purchase agreements, which transfer all the risks and rewardsincidental to ownership as well as the legal title at the end of such contractual period, are classied ashire purchase receivables. Such assets are accounted for in a similar manner as those of nance lease.

3.4 Face Leae

Leases that transfer substantially all the risks and rewards incidental to ownership of an asset tothe lessee (customer) are classied as nance leases. Amounts due under such leases are recorded asreceivables at the amount of the Company’s net investment in leases.”

3.5 Propert ad Epmet

Land and buildings held for use in the supply of services, or for administrative purposes, are statedin the balance sheet at their cost or revalued amounts, less any subsequent accumulated depreciationand subsequent accumulated impairment losses. Revaluations are performed with sucient regularitysuch that the carrying amounts do not dier materially from those that would be determined using fairvalues at the balance sheet date.

Any revaluation increase arising on the revaluation of such land and buildings is credited in equity tothe properties revaluation reserve, except to the extent that it reverses a revaluation decrease for thesame asset previously recognised in prot or loss, in which case the increase is credited to prot orloss to the extent of the decrease previously charged. A decrease in the carrying amount arising on therevaluation of such land and buildings is charged to prot or loss to the extent that the loss exceedsthe balance, if any, held in the properties revaluation reserve relating to a previous revaluation of thatasset.

Upon disposal or retirement of a revalued property, any corresponding revaluation surplus remainingis transferred to retained earnings.Each year the dierence between depreciation based on the revaluedcarrying amount of the asset and depreciation based on the asset’s original cost is transferred fromrevaluation reserve to retained earnings.

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

Depreciation is charged to prot or loss so as to write o the cost or valuation of assets, other than freehold

land and properties under construction, over their estimated useful lives, using the straight-line method.The estimated useful lives, residual values and depreciation method are reviewed at each year end, withthe eect of any changes in such estimates accounted for prospectively.

Depreciation is provided from the date the asset is available for use up to the date it is derecognized. Thecompany provides depreciation for the following assets on the straight line method over the estimateduseful life stated below:

uefl Lfe year Buildings 40Motor vehicle 05Oce equipment 08Computer Equipment 05

Furniture and ings 10Oce li 10

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3.6 itable Aet

An intangible asset is an identiable non monitory asset without physical substance held for use in theproduction or supply of goods or services, for rental to others or for administrative purpose.

3.6.1 Compter soare

All computer soware costs incurred, licenced for use by the company, which are not integrally relatedto associated hardware, which can be clearly identied reliably measured and its probable that theywill lead to future economic benets, are recognized as an asset.

3.6.2 Amortzato of Compter soare

Computer soware are amortized on a straight line basis, over the estimate useful economic life. Theestimated useful life of soware is ve years. Amortization expense is included the prot or loss forthe year.

3.7 imparmet of no-Facal Aet

At each balance sheet date, the Company reviews the carrying amounts of its tangible and intangibleassets to determine whether there is any indication that those assets have suered an impairment loss.If any such indication exists, the recoverable amount of the asset is estimated in order to determine theextent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of anindividual asset, the Company estimates the recoverable amount of the cash-generating unit to which

the asset belongs.

Where a reasonable and consistent basis of allocation can be identied, corporate assets are also allocated toindividual cash-generating units, or otherwise they are allocated to the smallest group of cash-generatingunits for which a reasonable and consistent allocation basis can be identied.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carryingamount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount.An impairment loss is recognised immediately in prot or loss, unless the relevant asset is carried at arevalued amount, in which case the impairment loss is treated as a revaluation decrease.

3.8 Cah ad Cah Evalet

Cash and cash equivalents comprise cash in hand and demand deposits and short-term highly liquidinvestments, readily convertible to known amounts of cash and are subject to an insignicant risk ofchanges in value.

For the purpose of cash ow statement, cash and cash equivalents consist of cash in hand and cash at banks net of outstanding bank overdras. Investments with short maturities i.e. three months or lessfrom the date of acquisition are also treated as cash equivalents.

3.9 Other Recevable

Other receivables balances are stated at the amounts expected to be received, aer providing for doubtfulreceivables.

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3.10 Ctomer Depot

A liability is recognised when the Company receives a deposit from a customer under the terms andconditions specied. The liability is measured at the consideration received while interest payable ifany are accrued on a time proportionate basis

3.11 Provo

Provisions are recognized when the company has a present obligation (legal or constructive) as a resultof a past event, where it is probable that an outow of resources embodying economic benets will berequired to sele the obligation and a reliable estimate can be made of the amount of the obligation.

As per the provisions of Economic Service Charge Act No: 13 of 2006 amendments thereto, ESC is payableon the liable turnover at specied rates. ESC is deductible from the income tax liability. Any unclaimedliability can be carried forward and set-o against the income tax payable in the four subsequent yearsas per the relevant provision in the Act.

3.12 Retremet Beet Oblato

3.12.1 Deed Beet Pla – gratt

The company is liable to pay gratuity in terms of the Payment of Gratuity Act No. 12 of 1983, accordingto which an obligation to pay gratuity arises only on completion of 5 years of continued service. TheCompany’s obligation under that the said Act is determined based on an actuarial valuation, using theprojected unit credit method, carried out by a professional actuary once in every three years. Actuarial

gains and losses that exceed 10 per cent of the present value of dened benet obligation at the end ofthe prior period are amortized over the expected average remaining working lives of the employees.The liability is not externally funded.

3.12.2 Deed cotrbto pla – EPF & ETF

All employees of the company are members of the Arpico Employees’ Provident Fund (EPF)and Employees’ Trust Fund (ETF), to which the Company contributes 20% and 3% of theirgross emoluments, respectively. These contributions are included in the income statement asan expense in the period in which the contribution was due.

3.13 Taxato

3.13.1 Crret Taxe

Current tax assets and liabilities consist of amounts expected to be recovered from or paid to thetaxation authorities. The provision for current tax is based on the taxable prot for the year andcomputed based on the provisions of Inland Revenue Act No. 10 of 2006 and amendments thereto.Taxable prots dier from prot as reported in the Company’s Income Statement because it excludeitems of income or expense that are taxable or deductible in other years and it further excludes itemsthat are never taxable or deductible.

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3.13.2 Deferred Taxe

Deferred taxes are recognised using the balance sheet liability method, on temporary dierences atthe balance sheet date between the tax bases of assets and liabilities and their carrying amounts for thenancial reporting purposes.

Deferred tax liabilities are generally recognised for all taxable temporary dierences, and deferred taxassets are generally recognised for all deductible temporary dierences to the extent that it is probablethat taxable prots will be available against which those deductible temporary dierences can be utilized.Such assets and liabilities are not recognised for temporary dierences arising from goodwill or frominitial recognition (other than in a business combination) of other assets and liabilities in a transactionthat aects neither the taxable prot nor the accounting prot. The carrying amount of deferred tax

asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable thatsucient taxable prot will be available to allow all or part of the deferred tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the yearwhen the asset is realized or the liability is seled, based on tax rates (and tax laws) that have beenenacted or substantively enacted at the balance sheet date.

Deferred tax assets and liabilities are oset when there is a legally enforceable right to set o currenttax assets against current liabilities and when they relate to income taxes levied by the same taxationauthority and intends to sele its current assets and liabilities on a net basis. Deferred tax relating toitems recognized directly in equity is recognized in Equity and not in the income statement.

3.13.3 VAT o Facal servce

VAT on nancial services is calculated in accordance with the amended VAT Act No. 07 of 2003.

3.14 Revee Recoto

3.14.1 Leae icome

Finance income on leasing is recognised based on a paern reecting a constant periodic rate of returnon capital outstanding. The excess on aggregate lease rentals receivable over the cost of the leased assetsconstitutes the total un-earned nance income at the commencement of a lease. The unearned nanceincome included in the lease rental receivable is not taken into revenue.

Accounting for lease is done on the basis of the nancing method. The excess of aggregated contract rental

receivable over the cost of the lease assets constitute the total unearned income at the commencementof contract.

The unearned income is recognized as income over the terms of the lease commencing from the monthin which the lease is executed in proportion to the declining receivable balance of the lease, so as toprovide a constant periodic rate of return of the lessor ’s net outstanding of the lease.

3.14.2 Hre Prchae icome

Income arising from the residual interest in the hire purchase agreement is credited to the incomestatement as occurring in proportion to, the declining receivable balance of the agreement.

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3.14.3 iteret icome

The interest income on xed income securities is recognized on a time proportionate basis. Interestceases to be taken in to revenue when the recovery of interest and/or principal is in arrears for sixmonths. Interest receivable on loans and advances classied as debtors, if in arrears for over six (06)months (Rentals receivable on lease, loans and other advances), is accounted for on cash basis. Interestfalling due from Hirers and Loans is credited to interest in suspense account aer they are classied asnon-performing.

3.14.4 Real Etate Revee

Revenue is normally recognized when properties are sold and the buyer has taken possession of such

properties. (When there is insucient assurance as to the receipt of the total considerations, income isaccounted for on a cash basis.)

Revenue is recognized in full on Land sales under Loans on Easy Payment contracts upon the receiptof 30 % down payment and signing of a formal easy payment agreement but before the transferof property to the buyer. In case of early termination of the contract, the 30% down payment can be forfeited. The down payment is higher than the amount taken credit as prot and hence thereason for taking credit for prot in full. The company also has the right to resell the plot since theownership is not transferred until the payment of all easy payment installments.

3.14.5 Ea Pamet icome

Easy payment income is recognized on an accrual basis.

3.14.6 Defalt iteret

Default charges for late payment of nance lease rentals, easy payment rentals and hire purchaserentals are recognized as income on receipt basis.

3.14.7 ga or Loe o Dpoal of Propert ad Epmet

The dierence between the net selling price and the carrying amount is recognized in the incomestatement in the period in which the disposal occurs.

3.14.8 sale ad reprchae areemet

Where treasury bills/bonds and other corporate debt securities are sold subject to a commitment torepurchase them at a predetermined price (‘Repo’), the dierence between sale and repurchase priceis recognized as other income over the terms of the agreement using straight line method.

3.14.9 Trad come

Gains or losses arising from the sale of investment securities and dealing securities are accounted inthe income statement.

3.15 Expee Recotoa) Interest ExpensesInterest expenses on customer deposits and borrowings are recognized using accrual basis.


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3.16 semet Report

A segment is a distinguishable component engaged in providing services subject to risks and rewardsthat are dierent to those of other Segments.

The primary format is based on the core businesses namely leasing, hire purchase, real estate and othernancial products.

The Company’s activities are located only in Sri Lanka. Consequently, the economic environment in

which the Company operates is not subject to risk and returns that are signicantly dierent on ageographical basis. Hence, disclosure by geographical region has not been provided.

Expenses directly identied to a particular segment are charged accordingly. Expenses that cannot be directly identied to a particular segment are allocated on bases decided by the management andapplied consistently throughout the period.

Financial information about business segments is disclosed in Note 40 to the nancialstatements.

3.17 Borro Cot

Borrowing costs are recognized as an expense in the period in which they are incurred.

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4 icome

Interest income

Other income

Trading income

5 iteret icomeFinance lease

Advances to customer

Government securities and deposits with banks

Other interest income

6 iteret Expee

Interest on deposits from customers

Short term borrowings

7 Oter Icome

Service charges

Share trading income

Dividend income

Sundry income

Insurance claim income

Fixed asset disposal income

Bad debts reversed/recovered

8 Operat Expee

Operat expee clde the follo:

Directors’ emoluments

Directors’ fees

Legal expenses

Depreciation

Auditors remuneration

Donations

Contribution to Arpico Employees’ Provident Fund

Employer’s contribution to Employees’ Trust Fund

Dened benet plan cost - Retiring Gratuity

2011/2012

Rs.

471,127,348

37,701,798

14,796,026

523,625,172

240,427,942

211,154,722

17,042,672

2,502,012

471,127,348

179,013,485

56,284,377

235,297,862

13,910,894

628,240

3,651,543

9,803,980

1,575,000

24,875

8,107,266

37,701,798

6,102,097

251,257

906,928

7,726,302

522,113

289,250

12,013,840

1,802,076

6,294,910

2010/2011

Rs

380,241,149

44,837,632

(11,944)

425,066,837

133,584,063

223,914,057

14,842,970

7,900,059

380,241,149

160,540,845

44,337,788

204,878,633

21,050,307

10,763,377

2,647,335

2,994,547

-

-

7,382,066

44,837,632

4,440,000

180,000

483,486

5,205,687

429,165

245,500

9,133,481

1,370,022

5,718,468


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2011/2012

Rs.

3,012,469

5,420,357

4,213,839

-

114,542

12,761,207

35,900

289,250

578,311

5,562,966

2,066,347

8,406,871

91,130

107,477

906,928

1,803,5152,395,466

2,293,010

4,360,617

3,656,154

1,776,682

3,550

455,991

-

3,221,874

38,012,039

4,721,860

(787,365)

-

15,875,051

19,809,546

2010/2011

Rs.

2,387,725

2,500,634

4,177,596

5,163,276

11,495

14,240,726

36,000

245,500

757,890

2,148,458

804,302

10,465,038

-

387,101

483,486

-1,540,404

3,112,698

-

-

-

-

-

13,059

-

19,993,936

5,235,668

-

78,535

5,819,722

11,133,925

9 Loa Loe ad Provo

Provo for Bad & Dobtfl Debts:

Hire Purchases

Consent Motion

Lease Finance

Pawning Advance

Personal Loan

10 Other Expee

Entertainment

Subscriptions and donations

General expenses

Advertising

Deposits - Insurance

Commission on introducing business

NBT

Real estate expenses

Legal expenses

Out o pocket expenseBadulla expenses

Anuradhapura expenses

Mulative - expenses

Godagama - expenses

Minuwangoda - expenses

Ja - Ela - expenses

Fall-in-value of shares

Unadjusted dierence

Loss due to Maharagama hold-up

11 icome Tax Expee

11.1 Chare to Taxato a follo:

Income Tax for the Period (Note - 11.2)

Under/(Over) Provision Previous Period

Social Responsibility Levy

Transfer / (Reversal) to / (from) deferred taxation (Note -11.3)


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11.2 Recoclato of Accoutg Prot ad Taxable icome

Prot before taxation

Disallowable expenses

Eect of allowable expenses

Tax losses utilized

Taxable income/(losses)

Unutilized tax lossesIncome tax at 28% (Prior year 35%)

Income tax for the year

Eective tax rate

11.3 Deferred Taxato

Balance at the beginning of the period (Note 11.4)

Amount originated/ (reversed)

Adjustment through eqity statementBalance at the end of the period (Note 11.4)

11.4 Deferred Tax ar from

Accelerated depreciation for tax purpose

Post employment retirement benets

Brought forward loss

Timing dierence

12 Bac/Dlted Ear Per share

Earnings per Share has been calculated by dividing the net prot aributable to ordinary shareholders

aer deducting dividend on preference shares by the weighted average number of ordinary shares in

issue as at balance sheet date.

Prot aer Taxation

Dividends on Irredeemable Cumulative Preferences Shares

Prot Aributable to the Ordinary Share Holders

Weighted Average Number of Ordinary Shares used as Denominator

(Note - 12.1)

Basic /Diluted Earnings per Ordinary Share - Rs.


2011/2012

Rs.

46,278,042

526,970,891

(604,756,377)

(9,080,501)

16,863,787

212,805,657

4,721,860

4,721,860

10.20%

Temporar

Derece

(148,382,990)

16,627,777

-(131,755,213)

2011/2012

Rs.

165,083,002

(21,114,515)

(212,805,657)

(68,837,170)

2011/2012

Rs.

32,044,949

(40,000)

32,004,949

4,462,500

7.17

geeral

Actvte

18,487,370

17,569,585

(10,112,667)

(9,080,501)

16,863,787

148,576,275

4,721,860

4,721,860

31.03.2012

Tax eect

(46,114,325)

15,875,051

10,964,866(19,274,408)

Leasi

Actvte

27,790,674

509,401,306

(594,643,710)

-

(57,451,730)

64,229,382

-

-

Temporar

Derece

(131,755,213)

37,121,645

25,796,398(68,837,170)

2010/2011

Rs.

31,004,326

317,590,329

(325,580,730)

(8,054,873)

14,959,052

164,709,1675,235,668

5,235,668

16.89%

31.03.2011

Tax eect

(51,934,047)

5,819,722

-(46,114,325)

2010/2011

Rs.

49,636,551

(16,682,597)

(164,709,167)

(131,755,213)

2010/2011

Rs.

21,659,654

(40,000)

21,619,654

4,462,500

4.84

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12.1 wehted Averae nmber of Ordar share

Qualifying ordinary shares at the beginning of the year

Weighted average number of ordinary shares at the end of the year

13 Dvded Per share

Dividends proposed

Number of ordinary shares

Dividend per share

14 Cah ad Ba Balace

Cash and bank balances

15 govermet Trear Bll ad Bod

Treasury bonds

REPO investments

16 Placemet th ba ad other acal ttto

Banks

Other nance companies

This note analyses the total dividend proposed for payment.

There were no interim dividends paid to ordinary share holders during the year ended 31st March 2012.

The nal dividend declared for the year ended 31st March 2011 was paid during the current nancial

year. The total paid as previous year dividend amounts to Rs. 8,925,000/-.

The Directors have recommended a nal ordinary dividend of Rs. 2/- for the year ended 31st March 2012,

which is to be approved at the annual general meeting to be held on 22nd August 2012. In accordance

with SLAS 12 (Revised) Events aer the Balance Sheet Date, the proposed nal dividend had not been

recognised as a liability as at 31st March 2012.

However, for the purpose of computing divided per share, the nal dividend to be approved has been

taken into consideration.

2011/2012

Rs.

4,462,500

4,462,500

2011/2012

Rs.

8,925,000

4,462,500

2

31.03.2012

Rs

31,965,804

31,965,804

3,477,100

196,123,165

199,600,265

45,000,000

-

45,000,000

2010/2011

Rs.

4,462,500

4,462,500

2010/2011

Rs.

8,925,000

4,462,500

2

31.03.2011

Rs

46,388,885

46,388,885

-

154,262,854

154,262,854

-

50,000,000

50,000,000


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17 Deal secrte

Ba, Facal & irace

Alliance Finance Co. PLC

Seylan Bank PLC

DFCC PLC

Lanka Orix Leasing Company

LB Finance PLC

Citicenze Development Bank PLCPeoples Leasing PLC

Vanik Incorporation Ltd

Ordinary Shares

Nonvoting Class “X”

Redeemable debentures

Warrants

Beverae, Food & Tobacco

Lanka Milk Foods PLC

Chemcal & Pharmacetcal

Lankem Ceylon PLCChemanex PLC

Hotel & Torm

Sigiriya Village PLC

Hotel Corporation PLC

Serendib Hotels PLC (N/V)

Poer & Eer

Laugfs Gas PLC

Mafactr

Blue Diamond Jewellery PLC

ACL Cables PLC

Valible One LTD

Motors

Diesel & Motor Engineering PLC

Lad ad Propert

Seylan Developments PLC

Total

Provision for diminution in market value

Dealing securities net of provision

Cost as at

31.03.2012

Rs.

195,474

-

1,551

511,869

113,335

283,1391,872,000

2,155

200

33,600

8,400

2,734,628

3,570588,773

159,034

404,080

192,128

184,000

48

780,646

2,600,000

788,919

479,309

11,936,859

(240,102)

11,696,757

no. of

Sares

as at

31.03.2012

3,750

-

24

5,700

800

4,000104,000

86

20

336

1,961

21,600

424,300

1,600

10,000

10,000

8,000

19

11,900

104,000

1,122

25,000

Maret

vale

as at

31.03.2012

Rs.

2,605,125

-

2,702

307,800

107,920

162,0001,206,400

-

-

-

-

2,112,480

7,560436,450

118,400

229,000

174,000

206,400

51

744,940

1,976,000

1,102,028

197,500

11,696,757

-

11,696,757

No. of

Shares

as at

31.03.2011

2,500

5,000

24

-

-

--

-

-

-

-

21,600

424,300

3,500

10,000

-

15,900

19

11,900

-

1,100

-

Cost as at

31.03.2011

Rs.

195,474

958,618

1,551

-

-

--

-

-

-

-

2,734,628

3,570588,773

159,034

404,080

-

365,700

48

780,646

-

788,918

-

6,981,040

-

6,981,040

Market

Value as at

31.03.2011

Rs.

2,125,250

730,000

4,123

-

-

--

-

-

-

-

2,525,040

16,863573,620

160,160

314,000

-

551,730

30

1,118,600

-

1,633,170

-

9,752,586

-

9,752,586


7/30/2019 362_1343385160



18 ivetore

Real Estate

Trucks

Three Wheelers

19 Loa ad Advace to Ctomer

Fallen due rentals on lease nanceTerm loans

Hire purchases

Facilities on real estate

Consent motion loans

Consent motion lease nance/hire purchases

Pawning advances

Foreclosed properties

Gross loans and advances

Specic provision for loans and advances

Total provision for loan lossesLoans and advances aer provision

Interest in suspense (Note - 19.3)

net loa ad advace

19.1 Movemet Provo for Loe o Loa ad Advace

Balance at the beginning of the period

Provision made during the period (Note 19.1.1)

Fully provided loans wrien o

Amount reversed during the period

Balance at the end of the period (Note 19.2)

19.1.1 Total Provo for Loa Loe

Specic provision charge/(release) for loans and advances

Specic provision charge/(release) for hire purchases

Specic provision charge/(release) for pawning advances

Total provision made during the year for loans and advances

Specic provision charge/(release) for leases

Total provision made during the year

31.03.2012

Rs.

26,150,953

7,590,000

83,595,060

117,336,013

65,031,64631,302,549

779,017,755

19,406,363

1,458,432

34,777,603

69,048,562

5,012,505

1,005,055,415

(18,542,787)

(18,542,787)986,512,628

(53,430,683)

933,081,946

26,336,494

12,761,207

(6,594,730)

(6,902,683)

25,600,288

5,534,899

3,012,469

-

8,547,368

4,213,839

12,761,207

31.03.2011

Rs.

32,019,692

3,320,000

5,738,109

41,077,801

65,753,85522,747,904

603,505,365

28,404,346

1,700,545

47,046,028

143,815,986

7,807,682

920,781,711

(18,969,206)

(18,969,206)901,812,505

(66,651,447)

835,161,058

20,373,891

14,240,726

(3,114,847)

(5,163,276)

26,336,494

2,512,129

2,387,725

5,163,276

10,063,130

4,177,596

14,240,726


7/30/2019 362_1343385160



19.2 Provo for Loe o Loa ad Advace

Loans and advances to customers

Finance leases

19.3 Movemet iteret spee


Interest suspended during the period

Interest recovered/rebate during the period

Balance at the end of the period

31.03.2012

Rs.

18,542,787

7,057,502

25,600,289

66,651,447

69,251,366

(82,472,130)

53,430,683

31.03.2011

Rs.

18,969,206

7,367,288

26,336,494

56,234,210

68,186,213

(57,768,976)

66,651,447


20 net Ivetmet Leases

Within one year

One to ve years

Less: Unearned nance income

Present value of minimum lease payments

Allowance for uncollectible lease payments

gro vetmet

i lease

31.03.2012

Rs.

631,698,738

1,108,432,878

1,740,131,616(516,450,105)

1,223,681,511

(7,057,502)

1,216,624,009

31.03.2011

Rs.

303,239,712

534,006,623

837,246,335(251,575,160)

585,671,175

(7,367,288)

578,303,887

31.03.2012

Rs.

327,899,568

895,781,943

1,223,681,511-

1,223,681,511

(7,057,502)

1,216,624,009

31.03.2011

Rs.

159,294,839

426,376,336

585,671,175

-

585,671,175

(7,367,288)

578,303,887

Preet value of mum

Leae paymet

20.1 Movemet Provo for Loa Loe

Balance at the beginning of the periodProvision made (reversal) during the period


21 Other Recevable

Interest receivable

Advance, deposit and prepayment

Amount due from related parties

Other receivables

31.03.2012

Rs.

7,367,288(309,786)

7,057,502

6,017,658

32,372,628

1,020,978

22,952,000

62,363,264

31.03.2011

Rs.

5,793,8101,573,478

7,367,288

9,133,811

37,287,348

174,926

6,460,805

53,056,890

7/30/2019 362_1343385160



22 icome Tax Refd DeBalance at the beginning of the periodAdd:- Tax creditsEconomic Service ChargesWith-holding TaxNotional tax creditACTAdd :- Income tax paymentsSelf assessment paymentSocial Responsibility LevyGross refund during the periodProvision for Taxation(Under) / over provision previous yearSocial Responsibility LevyBalance at the end of the period

23 ivetmet secrteListed equity securities (Note -23.1)Unlisted equity securities (Note -23.2)

31.03.2012Rs.

20,585,031

7,806,227319,603

1,526,105-

-75,100

30,312,066(4,721,860)

787,365-

26,377,570

1,788,68026,247,25128,035,931

31.03.2011Rs.

17,631,499

5,721,289862,190

1,281,947-

402,309-

25,899,234(5,235,668)

-(78,535)

20,585,031

1,283,62426,136,82827,420,452


23.1 Lted Et secrte

Ceylinco Insurance PLCBlue Diomands JewelleryWorld Wide LtdThe Finance Company PLCCentral Industries PLCAitken Spence PLCChemanex PLCSinhaputhra Finance Company PLC Citizence Development Bank PLCVanik Incoperation PLC

Ordinary SharesNonvoting Class “X”Redeemable debenturesWarrants

Pure Beverages Co. PLCLanka Carbons LtdCarson’s Marketing PLC

Provo for fall--value ofvetmet Blue Diomands Jewellery World Wide Ltd Central Industries PLCPure Beverages Co. PLCLanka Carbons Ltd

Carson’s Marketing PLC

Investment securities net o provision

Cost as at

31.03.2012

Rs.12,500

50,0006,9372,400

-38,395

125,0001,562,450

----

3,422111,66591,800

2,004,569

(8,282)(720)

(3,422)(111,665)(91,800)

(215,889)1,788,680

no: ofSares

1,250

6,8391,749

24133600

5,00095,485

8620

3361,961

4502,000

10,000

Maretvale as at31.03.2012

Rs.1,015,625

41,71852,6451,680

-60,900

444,5003,867,143

-------

5,484,210

Cost as at31.03.2011

Rs.12,500

50,0006,9372,400

15,90038,395

125,000781,250

2,155200

33,6008,4003,422

111,66591,800

1,283,624

------

1,283,624

MarketValue as at31.03.2011

Rs.912,500

20,51764,7132,306

21,58680,040

515,0006,406,250

-------

8,022,912

7/30/2019 362_1343385160



23.2 ulted Et secrte

Alliance Agencies Limited

Orient Food Processors (Lanka) Ltd

Ranweli Holiday Village Limited

Mercantile Credit Limited

Credit Information Bureau of Sri Lanka

Unit Trusts

Finance House Consortium LtdMBSL Savings Bank

Nation Lanka Equities (Pvt) Ltd

Alnco Insurance Brokers

Valliable One PLC

Provo for-fall- vale of ivetmet

Orient Food Processors (Lanka) Limited

Ranweli Holiday Resorts Limited

Mercantile Credit LimitedMBSL Savings Bank

Nation Lanka Equities (Pvt) Ltd

Investment securities net o provision

24 ivetmet Aocate Compa

Balance at the beginning of the yearPrior period adjustment

Share of prot aer tax

Dividend received

no. of

Sares

1,303

5,000

40,444

231

147

17,819

20,00062,500

514,289

2,150,000

104,000

Cost as at

31.03.2012

Rs.

18,215

-

188,495

-

14,700

250,000

200,000625,000

5,928,600

19,712,500

-

26,937,510

-

-

-(588,125)

(102,134)

(690,259)

26,247,251

31.03.2012

Rs

5,041,715-

5,576,454

(438,750)

10,179,419

Cost as at

31.03.2011

Rs.

18,215

50,000

151,670

2,492

14,700

250,000

200,000625,000

1,500,000

21,500,000

2,600,000

26,912,077

(49,999)

(32,500)

(2,491)(588,125)

(102,134)

(775,249)

26,136,828

Restated

31.03.2011

Rs

5,441,671(1,838,209)

1,789,253

(351,000)

5,041,715


7/30/2019 362_1343385160




name of Aocate

Alnco Insurance Brokers (Pvt) Ltd

smmared Facal iformato of Aocate

Aet ad Lablte a at 31t March

Total Assets

Total Liabilities

Net Assets

Redeemable Preference Shares

Net Assets aer Redeemable Preference Shares

Revee ad Prot for the year Eded

Total Revenue

Prot before Tax

Prot aer Tax

25 Deferred Taxato

Balance brought forward

Deferred tax adjustment relating to revaluation on building in prior periods

Deferred tax adjustment relating to revaluation on building in current year

Deferred tax relating to additional depreciation on revaluation

Originated/(reversed) during the year - (Note - 11.3)

Balance carried forward

Note - Previous year gures have been restated due to correction in the prot share of associate company.

Details of the Company’s Investment in Associates is as follows:

31.03.2012

Rs

39%

96,666,497

(31,140,424)

65,526,073

(39,425,000)

26,101,073

44,216,051

16,115,406

14,423,600

46,114,325

(4,844,696)

(7,723,170)

1,603,000

(15,875,051)

19,274,408

Owersi Iterest

31.03.2011

Rs

39%

77,058,198

(21,130,726)

55,927,472

(43,000,000)

12,927,472

33,809,761

9,304,986

4,687,828

51,934,047

-

-

-

(5,819,722)

46,114,325

7/30/2019 362_1343385160




C o s t a d A c c u m u l a t e d D e p r e c i a t i o o f t h e V a l u e d A s s e t s

L a n d

B u i l d i n g s

A c c u m u l a t e d d e p r e c i a t i o n o n b u i l d

i n g

2 6 P

r o p e r t y a d E q u i p m e t

C

o s t o r v a l u a t i o

B

a l a n c e

a s

a t 3 1 A p r i l

2 0 1 1

A

d d i t i o n s

R

e v a l u a t i o n r e s e r v e

T

r a n s f e r d e p r e c i a t i o n o n r e v a l u a t i o n

D

i s p o s a l s

B

a l a n c e a s a t 3 1 s t M a r c h 2 0 1 2

A

c c u m u l a t e d D e p r e c i a t i o

B

a l a n c e a s a t 0 1 s t A p r i l 2 0 1 1

D

e p r e c i a t i o n c h a r g e f o r t h e y e a r

T

r a n s f e r d e p r e c i a t i o n o n r e v a l u a t i o n

D

i s p o s a l s

B

a l a n c e a s a t 3 1 s t M a r c h 2 0 1 2

C

a r r y i g A m o u t

A

s a t 3 1 . 0 3 . 2 0 1 2

A

s a t 3 1 . 0 3 . 2 0 1 1

F u r i t u r e

&

F i i g s R s .

1

6 , 6 8 9 , 2 1 0

6 , 4 3 1 , 1 7 8 - -

( 1 0 2 , 2 9 9 )

2

3 , 0 1 8 , 0 8 9

4 , 7 5 9 , 0 3 2

1 , 8 3 9 , 2 1 9 -

( 1 0 2 , 2 9 9 )

6 , 4 9 5 , 9 5 1

1

6 , 5 2 2 , 1 3 7

1

1 , 9 3 0 , 1 7 8

O c e

E q u i p m e t R s .

6 , 8 0 2 , 6 2 2

3 , 0 7 7 , 5 2 3 - - -

9 , 8 8 0 , 1 4 5

3 , 1 6 6 , 5 9 8

8 1 0 , 8 2 1 - -

3 , 9 7 7 , 4 1 9

5 , 9 0 2 , 7 2 6

3 , 6 3 6 , 0 2 4

C o m p u t e r

E q u i p m e t R s .

1 4 , 4 0 9 , 9 1 9

4 , 6 7 0 , 0 5 4 - - -

1 9 , 0 7 9 , 9 7 3

7 , 6 2 8 , 2 5 7

2 , 7 2 9 , 3 8 1 - -

1 0 , 3 5 7 , 6 3 8

8 , 7 2 2 , 3 3 5

6 , 7 8 1 , 6 6 2

M o t o r

v e i c l e

R s .

6 , 1 5 6 , 0 0 0 - - - -

6 , 1 5 6 , 0 0 0

5 1 3 , 0 0 0

1 , 3 9 4 , 7 3 3 - -

1 , 9 0 7 , 7 3 3

4 , 2 4 8 , 2 6 7

5 , 6 4 3 , 0 0 0

L a d

R s .

5 9 , 0 2 5 , 0 0 0 -

2 1 , 3 7 5 , 0 0 0 - -

8 0 , 4 0 0 , 0 0 0 - - - - -

8 0 , 4 0 0 , 0 0 0

5 9 , 0 2 5 , 0 0 0

B u i l d i g s

R s .

3 8 , 0 4 7 , 8 0 9 -

2 7 , 5 8 2 , 7 5 1

( 1 2 , 4 2 7 , 2 8 8 )

-

5 3 , 2 0 3 , 2 7 2

1 1 , 4 7 5 , 1 4 3

9 5 2 , 1 4 5

1 2 , 4 2 7 , 2 8 8 )

- -

5 3 , 2 0 3 , 2 7 2

2 6 , 5 7 2 , 6 6 6

T o

t a l R s .

1 4 3 , 4 9 0 , 3

6 2

1 4 , 1 7 8 , 7

5 5

4 8 , 9 5 7 , 7

5 1

( 1 2 , 4 2 7 , 2 8 8 )

( 1 0 2 , 2 9 9 )

1 9 4 , 0 9 7 , 2

8 0

2 9 , 9 0 1 , 8

3 2

7 , 7 2 6 , 2

9 9

( 1 2 , 4 2 7 , 2 8 8 )

( 1 0 2 , 2 9 9 )

2 5 , 0 9 8 , 5

4 3

1 6 8 , 9 9 8 , 7

3 7

1 1 3 , 5 8 8 , 5

3 0

T h e c a r r y i n g a m o u n t o f t h e f r e e h o l d p r o p e r t i e s , i f t h e y w e r e c a r r i e d a t c o s t l e s s a c c u m u l a t e d d e p r e c i a t i o n w o u l d h a v e b e e n a s f o l l o w s :

A n i n d e p e n d e n t v a l u a t i o n o f t h e c o

m p a n y ’ s l a n d a n d b u i l d i n g w a s p e r f o r m e d b y M e s s e r s A . Y . D a n i e l & S o n s t o d e t e r m i n e t h e f a i r

v a l u e o f t h e l a n d a n d b u i l d i n g s . T h e e e c t i v e d a t e o f t h e v a l u a t i o n i s 3

1 s t M a r c h 2 0 1 2 .

D e t a i l s o f t h e l a n d a n d b u i l d i n g h o l d b y t h e c o m p a n y i s a s f o l l o w s :

3 1 . 0 3 . 2 0 1 2

R s .

1 , 1 1 5 , 0 0 0

1 0 , 3 0 2 , 4 8 4

( 5 , 6 6 9 , 0 6 5 )

5 , 7 4 8 , 4 1 9

3 1 . 0 3 . 2 0 1 1

R s .

1 , 1 1 5 , 0 0 0

1 0 , 3 0 2 , 4 8 4

( 5 , 2 5 6 , 9 6 5 )

6 , 1 6 0 , 5 1 9

O c e L i

R s .

2 , 3 5 9 , 8 0 2 - - - -

2 , 3 5 9 , 8 0 2

2 , 3 5 9 , 8 0 2 - - -

2 , 3 5 9 , 8 0 2 - -

E x t e t

1 8 . 3 P c s

C a r r y i g v a l u e a s a t

3 1 s t M a r c h 2 0 1 2

R s .

8 5 , 5 9 7 , 6 6 6

n

u m b e r o f b u i l d i g s

0 1

7/30/2019 362_1343385160



27 itable Aet

Compter soare

Cost

Balance as at 1st April

Reclassied from property, plant and equipment

Additions

Balance as at 31st March

Amortzato


Reclassied from property, plant and equipment

Amortisation


Carr amot



28 Ba Overdra

Seylan Bank - A/c No: 0830 325002 001Union Bank - A/c No: 4206200018

29 Ctomer Depot

Term deposits

30 iteret bear Loa ad Borro


Loans obtained during the period

Loans repayment during the periodBalance at the end of the period

30.1 Detal of iteret Bear Borro

Securitization Loan - Deutsche Bank PLC (Trustee)

Term Loan - Seylan Bank

Bank Loan - NDB

Bank Loan - HNB

Commercial papers

31.03.2012

Rs

3,581,359

-

-

3,581,359

1,390,464

-

716,272

2,106,736

2,190,895

1,474,623

28,633,22018,353

28,651,573

1,699,257,579

311,128,684

505,000,000

(231,249,004)584,879,680

201,612,952

147,316,728

160,950,000

50,000,000

25,000,000

584,879,680

31.03.2011

Rs.

-

3,581,359

-

3,581,359

-

674,192

716,272

1,390,464

-

2,190,895

--

-

1,251,714,232

172,490,206

349,036,672

(210,398,194)311,128,684

120,891,259

190,237,425

-

-

-

311,128,684


7/30/2019 362_1343385160



30.2 Detal of Aet Pleded

Faclt

200 M

200 M

200 M

25 M

55 M

natre of Lablt

secrtzatoLoa

Term loa

Medimterm loa

Overdrafaclt

Overdrafaclt

name of Ba

) Detche Ba PLC(Trstee)

) sela Ba

iii) nDB

v) uo Ba

v) sela Ba

secrt Pleded

Mortgage over the receivablesdue to the Company and themotor vehicles leased and/or hired and i rrevocablyappoint the trustee as itsAorney to receive the moniesdue to and receivable by theCompany.

1. Assignment over performingl e as e and hi re purchas eagreements with a specialpower of attorney up to amaximum of LKR 300 Mn.

2. Letter of undertakingconfirming that the companywill sele the full outstanding orsubstitute same with performingleases if a particular leasematures or falls in to arrearsfor more than 03 months.

1. Agreement to Mortgage overLease/ Hire Purchase receivabledue to specic lease contractsand hire purchase contractshaving a Lease/ Hire Purchasereceivable value aggregatingfor LKR 240 Mn together withSupplementary Mortgage Bondsto be executed bi annually toensure that the portfolio ofLease/ Hire Purchase receivableis maintained at LKR 240 Mn.

2. Irrevocable Power of Aorney

in favour of the Bank

Primary oating mortgage bondfor LKR 25 Mn over currentlease/hire purchase receivablehaving a minimum total valueof LKR 33 Mn.

Primary mortgaged bondfor LKR 30 Mn, secondarymortgaged bond for LKR 11Mn and teritary mortgage bondfor LKR 14 Mn over property atHavelock Road, Colombo - 5.


7/30/2019 362_1343385160



31 Trade ad Other Paable

Interest payable on deposits

Purchase creditors

Lumpsum advances - Threewheelers

Advances from real estate projects

Accrued expenses

Miscellaneous

Amount due to related parties

Damages payable to Maharagama pawning clients

32 Retremet Beet Oblato

Present value of unfunded dened benet obligation

32.1 Movemet the preet Vale of Beet Oblato

Opening dened benet obligation

Current service cost

Interest cost

Acturial/(gain) or loss

Benet paidClosing dened benet obligation

In addition to above demographic assumptions such as mortality, withdrawal, and retirement age

were considered for the actuarial valuation. In 2009, 1967/70 mortality table was used by the Institute

of Actuaries London was taken as the base for the valuation.

31.03.2012

Rs

54,031,695

40,662,829

-

757,985

44,659,391

19,684,371

45,828

3,096,076162,938,175

21,114,515

21,114,515

16,682,597

3,473,849

1,835,086

985,975

(1,862,992)21,114,515

31.03.2011

Rs

44,917,359

23,228,340

783,716

548,057

35,591,970

16,438,190

45,828

-121,553,460

16,682,597

16,682,597

12,939,005

1,905,089

1,552,680

2,260,699

(1,974,876)16,682,597


Messrs Actuarial & Management Consultants (Pvt) Limited, actuaries carried out an actuarial valuation of

the dened benet plan gratuity on 31st March 2012. Appropriate and compatible assumptions were used

in determining the cost of retirement benets.

The principal actuarial assumption used were as follows:

Discount rate 11.5%

Future salary increases 9%

7/30/2019 362_1343385160



33 stated Captal

Ordar share



Preferece share

50,000 Irredeemable cumulative preference shares

36 Revee Reerve

Dividend equalization reserve - (Note - 36.1)

General reserve - (Note - 36.2)

Retained prot - (Note - 36.3)

31.03.2011

Rs

95,812,500

95,812,500

500,000

96,312,500

31.03.2011

Rs

72,500

22,035,535

85,042,804

107,150,839

31.03.2012

Rs

95,812,500

95,812,500

500,000

96,312,500

31.03.2012

Rs

72,500

22,035,535

101,526,496

123,634,531


34 stattor Reerve Fd

36.1 Dvded Ealzato Reerve

36.2 geeral Reerve

35 ivetmet Fd

A statutory reserve fund to secure the deposit holders of the company was created under the directionsissued by the Central Bank of Sri Lanka under Finance Companies Act No. 78 of 1988 and Finance

Companies (capital funds) Direction No. 01 of 2003. Funds are transferred to reserve fund out of the

net prot of each year based on the criteria specied in the said direction.

Dividend equalization reserve represents the amount set aside by the Directors from it’s retained earn-

ings for future dividends payable.

General reserve represents the amount set aside by the directors for general

applications.

As proposed in the budget proposals of 2011 every person or partnership who is in the business of

banking or nancial service is required to establish and operate an Investment Fund Account.

As and when taxes are paid aer 1st January 2011, Registered Finance Companies (RFCs) and Special-

ized Leasing Companies (SLCs) are required to transfer the funds to the Investment Fund Account

and build a permanent fund as explained below:

8% of the prots calculated for the payment of Value Added Tax (VAT) on nancial services on dates

as specied in the VAT Act for payment of VAT.

5% of the prot before tax calculated for payment of income tax purpose on dates specied in Section

113 of the Inland Revenue Act for the self assessment payments of tax.

7/30/2019 362_1343385160




36.3 Retaed Prot

38 Evet aer the Balace sheet Date

39 Related Part Traacto

39.1 Traacto th Drector ad Other ke Maaeral Pero (kMP)

ke Maaeral Pero

Cotiet Asset

37 Cotece ad Commtmet

Cotet Lablt

This represents the undistributed earnings held by the Company’s operations . This could be used to

absorb future possible losses or dividends payable.

The directors have recommended the payment of a nal dividend of Rs 2/- per share for the year

ended 31st March 2012 (2010/2011 - Rs. 2/- per share) which requires the approval of shareholders at

the Annual General Meeting to be held on 22nd August 2012.

No other events have occurred since the balance sheet date which would require adjustments to, or

disclosure in the nancial statements.

The Company carries out transactions in the ordinary course of business in an arm’s length basisat commercial rates with related parties . Transactions with related parties listed below have been

at commercial rates.

Related parties include Key managerial personnel dened as those persons having authority and

responsibility for planning, directing and controlling the activities of the Company and it’s related

companies. Such key managerial persons include the Board of Directors of the Company, key

employees who are holding directorship in other related companies of the Company and other

key executives who meet the criteria described above.

A case was led in the district court demanding damages for misplacing or misusing a certicate of

registration (C/R) of a seled contract. Presently there is a case pending in the magistrate court against

the suspects of the fraudulent transaction and the company had not been identied as a suspect in the

said case. The company is contesting the Magistrate court case on the grounds that the company was not

involved in any fraudulent transaction.

The company has led a case in Colombo Magistrate Court through the fraud bureau regarding

the loss that occurred in Maakkuliya Pawning Center. The case came up in the Magistrate Courts

Colombo on 08th June 2012. The productions were produced to the court’s custody through the police

and Magistrate ordered the police to obtain a report regarding all productions through the Gem and

Jewellery Authority.

The case will be called again on 19th October 2012.

Other than stated above, there are no contingencies and capital commitments as at the balancesheet date.

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Traacto th ke Maaeral Pero.

natre of TraactoDirectors feeEmolumentsOther emoluments

Directorsshareholdings-

name of Drector

Mr B. PonnambalamMr S. R. BandaranayakeMr W. J. D B L. JayalathMs R. E. WeerasingheMr Lyle D. PeirisMr N. M. Peiris

The following directors ceased holding oce during the year:

Mr. J.E.P.A. de SilvaMr R. K. E. P. de SilvaMr D. L. S. R. Perera

Amot (Rs.)

251,257.006,102,097.001,282,897.00

nmber ofSares

as at

31.03.2012

1004,492

11,1002,710

100100


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3 9 . 2

T r a s a c t i o s w i t h r e l a t e d e t i t i e s

T h e a g g r e g a t e v a l u e o f t r a n s a c t i o n s a n d

o u t s t a n d i n g b a l a n c e s r e l a t i n g t o e n t i t i e s o v e r w h i c h t h e d i r e c t o r s h

a v e s i g n i c a n t i n u e n c e a r e a s

f o l l o w

s : -

T r a n s a c t i o n

V a l u e - R s .

1 , 7 8 7 , 5 0 0

2 , 1 2 8 , 5 0 0

4 3 8 , 7 5 0

8 , 2 3 5

2 , 6 7 7 , 9 8 7

2 8 8 , 0 0 0

1 , 0 4 5 , 9 6 6

3 , 1 1 6 , 2 9 2

1 3 0 , 7 6 7 - -

N a t u r e o f T r a n s a c t i o n s

R e d e m p t i o n

o f p r e f e r e n c e s h a r e s i n v e s t e d i n A l n

c o

R e c e i p t o f p r e f e r e n c e d i v i d e n d

R e c e i p t o f o r d i n a r y d i v i d e n d

C o u r i e r c h a r g e s

M a n a g e m e n

t f e e s

P a y m e n t o f s e c r e t a r i a l f e e s

P a y m e n t o f p r o f e s s i o n a l f e e s

R e c e i p t o f c h i e f o p e r a t i n g o c e r ’ s s h a r e o f c o s t

R e c e i p t o f K

. H . F e r n a n d o ’ s s h a r e o f c o s t

D e p o s i t - M o b i l e p h o n e p a y m e n t o f s h a r e o f

R e n t a d v a n c

e - r e f u n d a b l e

n a m e

o f t h e C o m p a y

A l n c

o I n s u r a n c e

B r o k e

r s ( P v t ) L t d

A l l i a n

c e M a n a g e m e n t

S e r v i c

e s ( P v t ) L t d

A l l i a n

c e F i n a n c e

C o m p

a n y P L C

A l l i a n

c e T e c h

T r a d i

n g ( P v t ) L t d

R e l a t i o s i p

A s s o c i a t e

A l i a t e

A l i a t e

A l i a t e

n a m e o f D i r e c t o r s

M

r R . K . E . P . d e S i l v a

M

r D . L . S . R . P e r e r a

M

r S . R . B a n d a r a n a y a k e

M

r J . E . P . A . d e S i l v a

M

r R . K . E . P . d e S i l v a

M

r D . L . S . R . P e r e r a

M

r J . E . P . A . d e S i l v a

M

r R . K . E . P . d e S i l v a

M

r D . L . S . R . P e r e r a

M

r J . E . P . A . d e S i l v a

M

r R . K . E . P . d e S i l v a

M

r D . L . S . R . P e r e r a

O u t s t a d i g

A m o u t - R s .

1 9 , 7 1 2 , 5 0 0 - -

8 , 2 3 5 - - -

8 7 8 , 9 7 6

1 3 0 , 7 6 7

3 , 0 0 0

4 5 , 8 2 8

A s

a % o f

C

a p i t a l

F u d s

5 . 2 5 %

- - - - - - - - - -

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40. semet iformato

Assets

Leasing

Hire Purchase and EP

Investment in xed deposits with banks

Investment in government securities

Other nancial products

Real Estate

Trover

Leasing





Real Estate

Icome Leasing





Trading Income

31.03.2011

Rs.

578,303,887

571,493,177

50,000,000

154,262,854

251,997,093

39,827,374

1,645,884,385

290,697,252

505,463,095

2,023,499

12,819,471

88,796,220

13,053,657

912,853,194

133,584,063

164,068,203

2,023,499

12,819,471

88,796,220

(11,944)

401,279,512

%

50.26

32.46

1.86

8.25

5.88

1.29

100.00

43.97

47.91

0.33

1.36

6.27

0.16

100.00

48.10

32.90

0.67

2.74

12.63

2.96

100.00

31.03.2012

Rs.

1,216,624,009

785,698,677

45,000,000

199,600,266

142,370,764

31,163,458

2,420,457,174

442,401,443

482,044,717

3,348,003

13,694,670

63,117,750

1,639,074

1,006,245,657

240,427,942

164,449,877

3,348,003

13,694,670

63,117,750

14,796,026

499,834,268

%

35.14

34.72

3.04

9.37

15.31

2.42

100.00

31.84

55.37

0.22

1.40

9.73

1.43

100.00

33.29

40.89

0.50

3.19

22.13

-

100.00

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4 1

M a t u r i t y A a l y s i s

A s s e t s

C a s h a n d b a n k b a l a n c e s

T r e a s u r y b i l l s a n d b o n d s

P l a c e m e n t w i t h n a n c i a l i n s t i t u t i o

n s

C o m m e r c i a l p a p e r s

D e a l i n g s e c u r i t i e s

I n v e n t o r i e s

L o a n s a n d a d v a n c e s t o c u s t o m e r s

N e t i n v e s t m e n t i n l e a s e

O t h e r r e c e i v a b l e s

I n c o m e t a x r e f u n d d u e

I n v e s t m e n t s e c u r i t i e s

I n v e s t m e n t i n a s s o c i a t e c o m p a n y

D e f e r r e d t a x a t i o n

P r o p e r t y a n d e q u i p m e n t

I n t a n g i b l e a s s e t s

T o t a l A s s e t s

L i a b i l i t i e s

B a n k o v e r d r a

C u s t o m e r d e p o s i t s

I n t e r e s t b e a r i n g b o r r o w i n g s

T r a d e a n d o t h e r p a y a b l e s

R e t i r e m e n t b e n e t o b l i g a t i o n s

T o t a l L i a b i l i t i e s

M o r e t a

0 5 y e a r s - - - - - -

1 3 , 7 8 0 , 2 6 2 -

7 4 , 9 0 0 -

2 8 , 0 3 5 , 9 3 1

1 0 , 1 7 9 , 4 1 9

1 9 , 2 7 4 , 4 0 8

1 6 8 , 9 9 8 , 7 3 7 -

2 4 0 , 3 4 3 , 6 5 7 - - -

5 , 5 9 6 , 3 9 9

1 8 , 8 2 1 , 8 6 0

2 4 , 4 1 8 , 2 5 9

B e t w e e

0 3 t o 0 5 y e a r s -

6 7 6 , 1 0 2 - - - -

2 7 5 , 6 3 1 , 8 1 5

4 0 2 , 0 5 9 , 8 3 4

8 , 0 0 4 , 2 0 0 - - - - - -

6 8 6 , 3 7 1 , 9 5 1 -

3 5 , 2 0 6 , 5 9 2 -

2 , 6 7 6 , 0 2 6

2 5 , 8 7 5

3 7 , 9 0 8 , 4 9 3

B e t w e e

0 1 t o 0 3 y e a r s -

1 , 7 3 8 , 5 4 9 - - - -

3 0 7 , 6 9 9 , 8 2 7

4 8 9 , 8 7 8 , 3 2 4

1 , 3 5 7 , 4 7 9 - - - - -

1 , 4 7 4 , 6 2 3

8 0 2 , 1 4 8 , 8 0 2 -

2 1 4 , 3 1 4 , 4 3 0

1 7 4 , 4 9 4 , 7 2 8

1 8 , 4 6 6 , 3 8 3

1 , 3 9 0 , 5 0 0

4 0 8 , 6 6 6 , 0 4 1

B e t w e e

0 3 t o

1 2 M o t h s -

5 7 9 , 5 1 6

1 7 , 5 0 0 , 0 0 0 -

1 1 , 6 9 6 , 7 5 7

4 4 , 6 3 9 , 5 1 3

1 5 2 , 7 6 5 , 5 4 7

2 4 3 , 5 1 4 , 3 8 8

3 4 , 1 4 4 , 5 1 7

2 6 , 3 7 7 , 5 7 0 - - - - -

5 3 1 , 2 1 7 , 8 0 9 -

9 3 4 , 9 0 2 , 3 9 3

3 0 8 , 7 2 1 , 7 0 2

7 3 , 3 2 1 , 3 3 3

8 7 6 , 2 8 0

1 , 3 1 7 , 8 2 1 , 7 0 8

L e s s t a

0 3 M o t h s

3 1 , 9 6 5 , 8 0 4

1 9 6 , 6 0 6 , 0 9 9

2 7 , 5 0 0 , 0 0 0 - -

7 2 , 6 9 6 , 5 0 0

1 8 3 , 2 0 4 , 4 9 5

8 1 , 1 7 1 , 4 6 3

1 8 , 7 8 2 , 1 6 8 - - - - - -

6 1 1 , 9 2 6 , 5 2 9

2 8 , 6 5 1 , 5 7 3

5 1 4 , 8 3 4 , 1 6 4

1 0 1 , 6 6 3 , 2 5 0

6 2 , 8 7 8 , 0 3 4 -

7 0 8 , 0 2 7 , 0 2 1

T o t a l a s a t

3 1 . 0 3

. 2 0 1 2

3 1 , 9 6

5 , 8 0 4

1 9 9 , 6 0

0 , 2 6 6

4 5 , 0 0

0 , 0 0 0 -

1 1 , 6 9

6 , 7 5 7

1 1 7 , 3 3

6 , 0 1 3

9 3 3 , 0 8

1 , 9 4 6

1 , 2 1 6 , 6 2

4 , 0 0 9

6 2 , 3 6

3 , 2 6 4

2 6 , 3 7

7 , 5 7 0

2 8 , 0 3

5 , 9 3 1

1 0 , 1 7

9 , 4 1 9

1 9 , 2 7

4 , 4 0 8

1 6 8 , 9 9

8 , 7 3 7

1 , 4 7

4 , 6 2 3

2 , 8 7 2 , 0 0

8 , 7 4 6

2 8 , 6 5

1 , 5 7 3

1 , 6 9 9 , 2 5

7 , 5 7 9

5 8 4 , 8 7

9 , 6 8 0

1 6 2 , 9 3

8 , 1 7 5

2 1 , 1 1

4 , 5 1 5

2 , 4 9 6 , 8 4

1 , 5 2 2

N o t e

1 4

1 5

1 6

1 7

1 8

1 9

2 0

2 1

2 2

2 3

2 4

2 5

2 6

2 7

2 8

2 9

3 0

3 1

3 2

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fINaNCIal hIghlIghTs

0

2

4

6

8

10

20122011201020092008

0

3

6

9

12

15

20122011201020092008

0

30

60

90

120

150

20122011201020092008

0

100

200

300

400

500

20122011201020092008

V a l u e ( R s . )

V a l u e ( R s . )

V a l u e ( R s . M n )

Year Year

Year Year

V a l u e ( % )

Earning Per Share (Rs.) Net Assets Per Share (Rs.)

Share Holders’ Funds (Rs. Mn) Return on Share Holders’ Funds (%)

Analysis of Income 2012

Rs %Lease 240,427,942 46%

Hire purchase & EP 164,449,878 31%

Fixed Deposits & Government Securities 17,042,673 3%

Other Financial Product 77,913,776 15%

Other Income 23,790,904 5%

523,625,173 100%

Lease 46%

Hire purchase & EP 31%

Fixed Deposits &Government Securities 3%

Other Financial Product 15%

Other Income 5%

Analysis of Income

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InDICATORS OF pERFORMAnCE

Return on Shareholders’ Funds %

Return on Total Assets %

Earnings Per Share (Rs.)

Net Assets Per Share (Rs.)

Dividend Payout Ratio (%)

Gross Dividend (Rs. Mn)

Dividend Per Share (Rs.)

For year Ended 31st March

OpERATIng RESuLTS

Prot before Tax

Less : Tax

Prot aer Tax

BALAnCE ShEET

Assets

Investments and Cash

Receivables

Stocks

Debtors

Property & Equipment

Liabilities

Term Deposits

Bank Overdra

Creditors & Other Liabilities

Shareholders’ Funds

NO. OF SHARES

(in Rupees Million)

Earnings Per Share = (Net Prot Aer Taxation - Preference Dividends) / No.of Ordinary Shares in Issue

Net Assets Per Share = Share holders’ funds /No. of Ordinary shares in issue

Dividend Per Share = Dividend paid (gross) / No. of Ordinary shares in issue

Dividend Payout Ratio = Dividend paid (gross)/ Prot aer Taxation

MARkET vALuE pER ShARE DuRIng ThE yEAR

Highest Value Recorded During the year

Lowest Value Recorded During the year

Market Value as at 31st March

TEN yEars summary

2003

(10.65)

0.00

(10.65)

81.64

33.15

355.37

6.52

49.77

526.45

416.16

0.00

65.99

482.15

44.30

526.45

1,575,000

(25.58)

(2.02)

(6.77)

28.12

-

-

-

2004

10.95

0.00

10.95

169.05

32.04

280.91

7.33

47.90

537.23

427.34

0.00

57.39

484.73

52.50

537.23

1,575,000

20.87

2.04

6.95

33.31

21.55

2.36

1.50

2005

20.43

(4.83)

15.60

103.56

39.51

377.66

7.07

46.21

574.01

413.55

10.41

84.35

508.31

65.70

574.01

1,575,000

23.74

2.72

9.88

41.71

20.19

3.15

2.00

2006

27.03

(4.68)

22.35

89.40

43.39

480.93

9.05

97.44

720.21

464.43

19.70

97.77

581.90

138.31

720.21

1,575,000

16.16

3.10

14.16

87.81

21.12

4.72

3.00

2007

20.93

(4.63)

16.30

111.69

98.46

557.64

10.81

96.64

875.24

541.86

63.54

75.49

680.89

194.35

875.24

1,575,000

9.80

2.04

10.33

123.40

24.17

3.94

2.50

Restated

2008

20.13

(5.11)

15.02

172.34

93.57

715.14

12.84

96.01

1,089.90

767.47

14.16

101.18

882.81

207.09

1,089.90

1,575,000

7.48

1.53

9.51

131.48

36.68

5.51

3.00

2009

15.56

(3.37)

12.19

322.24

126.30

818.74

25.80

100.97

1,394.05

796.12

27.66

276.49

1,100.27

293.78

1,394.05

4,462,500

4.87

0.98

6.81

65.83

54.88

6.69

1.50

2010/2011

(Rs.)

261.00

64.25

114.70

2011/2012

(Rs.)

134.90

88.00

93.00

2010

9.30

2.42

11.72

220.12

69.56

1,153.15

44.00

109.08

1,595.91

1,003.34

-

283.79

1,287.13

308.78

1,595.91

4,462,500

3.89

0.78

2.62

69.19

38.05

4.46

1.50

2011

32.79

(11.13)

21.66

330.09

66.70

1,454.54

53.06

115.78

2,020.17

1,251.71

-

449.37

1,701.08

319.09

2,020.17

4,462,500

6.89

1.19

4.84

71.51

41.32

8.93

2.00

2012

51.85

(19.81)

32.04

326.46

45.64

2267.02

62.36

170.46

2872.01

1699.25

28.65

768.94

2496.84

375.17

2,872.01

4,462,500

9.22

1.31

7.17

84.07

27.89

8.93

2.00

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Total no. of sta

Maaemet Strctre

Senior Management

Middle Management

Executives

Clerical & Other

Profeoal Maaemet

Aorneys at Law

Qualied Accountants

Graduates

MBA Holders

Other Professionals

Fctoal Aal

Administration Dept.

Human Resources Dept.

Legal Dept.

Deposits Dept.

Credit Marketing

Finance Dept.

Recoveries Dept.

Information Technology

Pawning

Branches

Working Directors

nos.

228

6

22

187

13

5

2

14

3

9

5

3

11

11

53

19

22

03

26

72

03

228

AS AT 31ST MARCH 2012

ThE humaN CapITal

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Arpico Finance Company PLC Annual Report 2011/2012

fOrm Of prOxy

I/We ..................................................................................................................................................... (in block leers) of........................................................................................................................................................

being a member/members of the above-named Company hereby appoint Brihadisvara Ponnambalam, or failinghim, Hafeez Rajudin, or failing him, Weheragoda Jayalathge Don Bede Lloyd Jayalath, or failing him, RuviniEroshini Weerasinghe, or failing her, Lyle Dennis Peiris, or failing him, Nilanka Mevan Pieris, or failinghim, …………………………………………………………………………………….……………………….......…….......................................... of ...........................................................NIC No. …....................................

as my/our proxy to represent me/us and to *vote for me/us on my/our behalf at the Sixty First Annual GeneralMeeting of the Company to be held on 22nd August, 2012 and at any adjournment thereof and at every pollwhich may be taken in consequence thereof.

1. Resolution No.1The Ordinary Resolution No.1 set out in the Notice conveningthe aforesaid Meeting.


3. Resolution No.3

The Ordinary Resolution No.3 set out in the Notice conveningthe aforesaid Meeting.



6. Resolution No.6The Ordinary Resolution No.6 set out in the Notice convening

the aforesaid Meeting.


For Against

Signed this ........................................... day of ........................................2012.

………………………………………… ..................................Shareholder N.I.C. No./Co. Reg. No./P.P. No. Signature

InstructionsastocompletionofFormofProxygivenoverleaf

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InSTRuCTIOnS AS TO COMpLETIOn OF ThE FORM OF pROxy

1. A Proxy holder need not be a member of the Company.

2. The Full Name and the Address of the Proxy holder and of the Shareholder appointing the Proxy should be entered legibly in the Form of Proxy. Please perfect the Form of Proxy, by signing in the space providedand lling in the date.

3. To be valid, the completed Form of Proxy should be deposited at the Oce of the Company Secretaries,No.84, Ward Place, Colombo 7, 48 hours before the time appointed for the holding of the meeting.

4. In the case of a Company or a Corporate Body, the Form of Proxy should be executed under its CommonSeal which should be axed and aested in the manner prescribed by its Articles of Association.

5. If the Form of Proxy has been signed by an Aorney, the relative Power of Aorney should also accompanythe completed Form of Proxy for registration, if such Power of Aorney has not already been registeredwith the Company.

6. If there is any doubt as to how the vote is to be exercised by reason of the manner in which the Form ofProxy has been completed, the Proxy holder will vote as thought t.

Note:IfyouwishyourproxytospeakandvoteattheMeetingyoushouldinterpolatethewords“tospeakand”inthe

spaceindicatedwithanasteriskandinitialsuchinterpolation.

fOrm Of prOxy

362_1343385160

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Transcript of 362_1343385160