Making Headlines


Annual Report of the Board of Directors on the Affairs of the Company

The details set out herein provide information required by the Companies Act No. 07 of 2007 to be set out in the Report of the Board of Directors on the Affairs of the Company and are guided by recommended best accounting practices.

The Board of Directors have the pleasure in presenting their report to the members, together with the audited consolidated Financial Statements for the year ended 31st March 2011 of People's Leasing Company Limited ("the Company"), a public limited liability company incorporated on 22nd August 1995 under the Companies Act No. 17 of 1982 and re-registered as required under the provisions of the Companies Act. No. 07of 2007.

Principal Activities
In addition to the principal activities hitherto carried namely, providing finance leases, operating leases, hire-purchase assets financing, Islamic financing and the issue of debt instruments. During the financial year under review, the Company commenced margin trading activities with the approval of the Securities and Exchange Commission of Sri Lanka on that behalf. The Company or its subsidiaries have not engaged in any activities, which contravene any laws or regulations.

Changes to the Group Structure
The shareholding of the Company in its subsidiary, People's Leasing Finance PLC, was reduced during the review period and stood at 88.51% as at 31st March 2011. With the incorporation of two other subsidiaries during the financial year under review, the Company has five other fully owned subsidiaries namely, People's Leasing Fleet Management Limited , People's Leasing Property Development Limited, People's Leasing Havelock Properties Limited, People's Microfinance Limited and People's Insurance Limited. People's Leasing Havelock Properties Limited and People's Microfinance Limited commenced their operations on 12th August 2010 and 3rd September 2010 respectively. The main activities of the subsidiaries of the Company include the followings;


Review of Business and Future Developments

An overall assessment of the Company's performance during the year, with comments on financial results and future developments, is contained in the Chairman's Review on (pages 6 to 9), the Chief Executive Officer's Review on (Pages 10 to 13),the Management Discussion and Analysis on (Pages 43 to 53) and Financial Review on (Pages 54 to 60) of this Annual Report. These Reports form an integral part of the Report of the Directors, and together with the Audited Financial Statements reflect the state of affairs of the Company and the Group.

The branch expansion policy continued during the year and the Company opened 7 branches and 61 window offices.

Financial Statements and Auditor's Report
The Financial Statements duly signed by the Directors are provided on pages 90 to 120 and the Independent Auditor's Report on the Financial Statements is provided on page 89 of this Annual Report.

Significant Accounting Policies
The significant policies adopted in the preparation of the Financial Statements are given on pages 94 to 103 of this Annual Report.

Accounting Period
The financial accounting period reflects the information from 1st April 2010 to 31st March 2011.

System of Internal Controls

The Board of Directors has designed and implemented a system ofInternal Controls required to carry out the operations of the Company in an orderly manner, safeguard its assets, and secure, as far as possible, the accuracy and reliability of financial records. Controls over financial reporting were also reviewed during the year to ensure that the financial reporting process is sound. The Directors have assigned the internal audit function to the Chief Manager-Internal Audit, who reviews and reports on the effectiveness of financial, operational and compliance controls. An enterprise risk management initiative has been implemented since 2006.

Corporate Governance

The Board of Directors is committed towards the further development of the Corporate Governance principles of the Company. The Board has ensured that the Company complied with the recommendations and proposals of the Code of Best Practice on Corporate Governance issued jointly by the Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka and the provisions of the Finance Leasing (Corporate Governance) Direction,No. 4 of 2009 issued under section 34 of the Finance Leasing Act. No. 56 of 2000 which is effective from January 2010. The measures taken in this regard are set out in the Corporate Governance Report on pages 26 to 39 of this Annual Report.



Human Resources
The Company has continued to invest in human capital development and implement appropriate human resource management policies to develop employees and optimise their contribution towards the achievement of corporate goals and objectives. Some of the processes and procedures adopted in this regard are mentioned on pages 63 to 65 of this Annual Report.

Stakeholder Management
The Company was foremost in managing stakeholders, covering the aspects of economy, environment, community, employee and product. The projects that have been carried out by the Company in this context are presented in the Report on Sustainability.

Board Sub Committees
Audit Committee
All the members of the Audit Committee are Non-Executive Directors. The CEO, Senior Management Committee members and internal and external auditors attend the meetings by invitation. The Report of the Board Audit Committee is given on page 86 of this Annual Report.

Enterprise Risk Management Committee
The Board of Directors has established a comprehensive risk management system in the Company to identify, evaluate and manage the risks associated with the operations of the Company. The system is reviewed on a regular basis by the Board to facilitate the changes in the business environment. A detailed overview of the process is set out in the Enterprise Risk Management Report on pages 67 to 76 of this Annual Report.

Vision, Mission and Corporate Conduct
The Company's vision and mission are provided on the inner front cover of this Annual Report. In achieving its vision and mission, all Directors and employees conduct their activities to the highest level of ethical standards and integrity as set out in the Code of Ethics.

The total revenue of the Company for the year ended 31st March 2011 was Rs. 9,818,197,745 (Rs. 7,783,159,278 in 2010). The consolidated revenue for the year ended 31st March 2011 was Rs. 10,661,763,893 (Rs. 8,058,279,750 in 2010).

Financial Results

The Company recorded a net profit of Rs. 2,579,809,680 million for the financial year. The Company's performance is tabulated as follows.


The Directors have recommended a final dividend of Rs. 1.50 per share.


Provision for Taxation
The tax position of the Company and its subsidiaries are disclosed in note 13 (page 105) to the Financial Statements. The income tax rate applicable to the Company operations is 35% and the Company is also liable for VAT on financial services at 20% for the period 1st April 2010 to 31st December 2010 and it was revised to 12% with effect from 1st January 2011.

Property, Plant and Equipment
The details of property, plant and equipment are presented in note 24 (pages 110 and 111) to the Financial Statements.

The movement in reserves during the year is set out in the Statement of Changes in Equity on page 92. Rs. 128.9 million (Rs. 60 million in 2010) was transferred from retained earnings to the reserve fund. A sum of Rs. 70.6 million was transferred to Investment Fund Reserve in compliance with the Central Bank Guidelines.

Details of investments held by the Company are disclosed in note 19, page 107 to the Financial Statements. Stated Capital and Shareholders' Funds In compliance with the Companies Act No. 07 of 2007, the Financial Statements reflect the stated capital of the Company. The stated capital is the total of all amounts received by the Company in respect of the issued share capital. The total capital and reserves stood at Rs. 8,441,966,696 as at 31st March 2011 (Rs. 6, 229, 393,330 as at 31st March 2010), details of which are provided in the Statement of Changes in Equity on page 92 of the Financial Statements.

Share Information
Information relating to earnings, dividends and net assets are available in the Ten Year Summary on pages 128 to 129 and Shareholder Information on pages 121 to 122 of this Annual Report.

There were eight registered shareholders holding ordinary voting shares as at 31st March 2011. The distribution of shareholding is given on page 121 of this Annual Report. The Company has made every endeavor to ensure the equitable treatment of all shareholders. Substantial Shareholdings People's Bank held 99.99% of the ordinary voting shares as at 31st March 2011.

Information to Shareholders
The Board strives to be transparent and provide accurate information to shareholders in all published material. Directorate As at 31st March 2011, the Directorate of People's Leasing Company Limited consisted of five Directors with wide financial knowledge and experience.


The qualifications and experience of the Directors is provided on pages 14 to 17 of this Annual Report.


The following persons were Directors of the Company as at the end of the financial year.

Mr. W. Karunajeewa is the Chairman of People's Leasing Finance PLC, People's Leasing Property Development Limited, People's Leasing Fleet Management Limited, People's Microfinance Limited, People's Leasing Havelock properties Limited. Mr. W. Karunajeewa ceased to be the Chairman of People's Insurance Limited during the year.

Resignations and appointments
Mr. Wajira Swarna Sri Bandara resigned as a Director of the Company in May 2010 and was re-appointed in June 2010. Mr. Yohan Soza was appointed to the Board in June 2010.

Interests Register
In compliance with the Companies Act No. 07 of 2007, the Company maintains an interests register which is available for inspection. Directors' Interest in Transactions The Directors of the Company have made general declarations as provided in section 192 (2) of the Companies Act No. 07 of 2007 of their interests in transaction of the Company. Details of the transactions disclosed therein are given on page 119.

Directors' Remuneration
The details of Directors' fees and Directors' emoluments paid during the year are stated below.

Directors' Interest in Shares
In compliance with section 200 of the Companies Act, The Directors have disclosed to the Board their shareholding in the Company and any acquisitions or disposals thereof. There is no change in the number of shares owned by any Director after the requirement relating to entries in the interests register came into force.

The Directors' individual shareholdings in the Company as at 31st March 2011 and 31st March 2010 are given below.

Director's Meetings
The details of Directors' meetings are presented on page 36 of this Annual Report.

Directors' Responsibility for Financial Reporting
The Directors are responsible for the preparation of the Financial Statements of the Company to reflect a true and fair view of the state of its affairs. The Directors are of the view that these Financial Statements have been prepared in conformity with the requirements of the Sri Lanka Accounting Standards, the Companies Act No. 07 of of 2007, the Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995 and the Regulations made under Finance Leasing Act No. 56 of 2000.

The Company made donations amounting to Rs. 58,807,910 (Rs. 5,268,830 in 2010) during the year.

Related Party Transactions
The Directors have also disclosed the transactions that could be classified as related party transactions in terms of the Sri Lanka Accounting Standards 30: Related Party Disclosure (revised 2005) which is adopted in the presentation of the Financial Statements and accordingly given in note 38 on pages 118 to 119 to the Financial Statements of this Annual Report. Compliance with Laws and Regulations The Company has not engaged in any activity contravening any laws and regulations.

The Company has not engaged in any activity that caused detriment to the environment. Initiatives taken by the Company to protect the environment are outlined in the Report on Sustainability.

Statutory Payments
To the best of their knowledge and belief, the Directors are satisfied that all statutory payments due to the Government, other regulatory institutions and in relation to the employees have been made except for certain assessments against which appeals have been lodged.

Outstanding Litigation
In the opinion of the Directors formed in consultation with the Company lawyers, litigation currently pending against the Company will not have a material impact on the reported financial results or future operations of the Company.


Events after the Balance Sheet Date
Details of events after the balance sheet date are reflected in note 42 (page 120) to the Financial Statements.

Going Concern
After considering the financial position, operating conditions, regulatory and other factors and such matters required to be addressed in the Code of Best Practice on Corporate Governance, issued jointly by the Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka, the Directors have a reasonable expectation that the Company possesses adequate resources to continue in operation for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Financial Statements.

The Company's auditors during the year under review were Messrs. Ernst & Young, Chartered Accountants. A sum of Rs. 1,150,000 was paid to them for audit and related services during the year under review. A sum of Rs. 371,426 was paid on account of non audit services including tax related services. Based on the declaration made by Messrs. Ernst & Young, and as far as the Directors are aware, the auditors do not have any relationship or interest in the Company or its subsidiaries other than to the extent disclosed in this paragraph.

Annual General Meeting

The Annual General Meeting will be held at the People's Bank Head Office, No. 75, Sir Chittampalam A. Gardiner Mawatha, Colombo 2 on 30th June 2011 at 1.00 p.m.

Appointment of Auditors
The retiring auditors, Messrs. Ernst & Young, have intimated their willingness to continue in office and a resolution to re-appoint them as auditors, and authorising the Directors to fix their remuneration, will be proposed at the Annual General Meeting.

Notice of Meeting
Notice of the meeting relating to the 15th Annual General Meeting is provided on page 137 of this Annual Report. By order of the Board of Directors

Rohan Pathirage
Company Secretary

Colombo 27th May 2011