7th ICAB National Awards for Best Published Accounts and Reports 2006 In the year 2007 we have made significant strides towards becoming one of the top financial institutions of the country. This inspires us to unlock our potential in emulating similar feat through further diversifying our products and Mr. Mafizuddin Sarker, Managing Director of LankaBangla Finance Limited is seen with services in 2008. the award in the presence of Dr. A B. Mirza Md. Azizul Islam, the Honorable Advisor of Finance, Planning, Commerce, Post & Telecommunication and Mr. Faruq Ahmed Siddiqi, Chairman, SEC This is a recognition of our transparency in disclosure of information and adherence to accounting practices in accordance with national and international standards. We dedicate this award to all our valued shareholders, clients, patrons and employees. 7th ICAB National Awards for Best Published Accounts and Reports 2006 In the year 2007 we have made significant strides towards becoming one of the top financial institutions of the country. This inspires us to unlock our potential in emulating similar feat through further diversifying our products and Mr. Mafizuddin Sarker, Managing Director of LankaBangla Finance Limited is seen with services in 2008. the award in the presence of Dr. A B. Mirza Md. Azizul Islam, the Honorable Advisor of Finance, Planning, Commerce, Post & Telecommunication and Mr. Faruq Ahmed Siddiqi, Chairman, SEC This is a recognition of our transparency in disclosure of information and adherence to accounting practices in accordance with national and international standards. We dedicate this award to all our valued shareholders, clients, patrons and employees. s t n 03 Notice of the 11th Annual General Meeting 04 Vision 04 Mission e 04 Goals 05 Core Values t 05 Strategic Objectives 06 Code of Conduct Guiding Principles 07 LankaBangla at a Glance n 08 Milestones 09 Recognitions 10 An Eventful Year for LankaBangla o 12 Corporate Information 14 Shareholding Structure 15 Board of Directors C 18 Management Team 19 Board Committees 19 Management Committees 20 Subsidiary Company 22 Statement on Risk Management 24 Statement on Corporate Governance 26 Statement on Corporate Social Responsibility 28 Projects Financed by LankaBangla 30 Value Added Statement 31 Consolidated Financial Highlights 34 Message from the Chairman 36 Message from the Managing Director 38 Directors' Report 54 Report of the Audit Committee 55 Audited Financial Statements 89 Audited Consolidated Financial Statements 121 Audited Financial Statements of Subsidiary Company 4 Vision To be the nation's most preferred financial services provider. Mission To lead by example through a commitment that empowers the organisation at every level to strive for the highest levels of quality, customer care and stakeholder value. Goals l To be the most sought after facilitator in creating wealth. l To optimise the value of being our Customer, Shareholder or Employee. l To establish strong regional presence. Core Values l Integrity: We are committed to conduct that reflects the highest standards of integrity in everything we do. l Teamwork: It is the essence of our ability to succeed as a trusted and preferred provider of financial solutions to our clients. Our overriding loyalty is to the good of the whole organization. We learn from each other and share our skills and resources across organizational boundaries for our clients' benefit and our own. 5 l Respect: We respect every individual. We draw strength from equal opportunity at the same time supporting personal growth and development. We value and we all benefit from the entrepreneurial spirit of each individual. l Professionalism: We are committed to the highest standards of professionalism, we pursue innovation, we continually quest for quality at each level, we are open to new ideas and we act decisively and consistently. We are determined to deliver outstanding quality so that our relationships with our clients will be long-lasting. Strategic Objectives l Introduction of new products and service lines through proper diversification & customization of existing products and services to ensure maximum market coverage. l Continuous improvement in operational processes through technological advancement, employee capacity building and improvement through human resources development programs, thereby ensuring effective and efficient utilization of human resources to maximise the value of the company. l Building synergy among buisness resources and activities to ensure maximum outputs from resource inputs. l Maintain strick compliance to good governance norms and regulations to ensure long term sustainability of the company. l Contribute to the society to share the achievements of the company with the nation. Code of Conduct Guiding Principles LankaBangla is a values driven organization. This means we do not deviate from our values, even if doing so would appear to have short-term benefits for the company. It is because we recognize that our company's reputation is a priceless asset. Our reputation not only affects whether or not someone will be our customer; it also determines whether we are proud to be associated with this organization. The Code of Conduct is designed to guide the personal business ethics of all of us. It applies to every employee of LankaBangla and may be furnished to others performing services for the company. In addition to the ethical guidelines 6 included in the code, there are many laws and regulations that affect each of the business that we do. Complying to law is mandatory for everyone and is not subject to business priorities or individual discretion. Personal Responsibilities Be an ethical role model Protect and enhance company's assets and reputation Understand and comply with laws, regulations and company policies that apply to the job Workplace Responsibilities Treat colleagues with respect and dignity Support the company's commitment to diversity and equal employment opportunity Provide a work environment free from intimidation and harassment Do not hold any outside positions with, or accept business opportunities from, anyone who does business or competes with the company Ensure that financial records are accurate and complete Protect company property Marketplace Responsibilities Safeguard the privacy, confidentiality and security of customer data Protect confidential information from others Make only factual and truthful statements about the company's products Prevent the use of company services for money laundering purposes LankaBangla at a Glance LankaBangla Finance Limited, a joint-venture financial institution established with multinational collaboration, started its journey in 1997. The institutional shareholding structure and corporate culture have enabled LankaBangla to be the most diversified financial service providing institution of the country. In 2003, LankaBangla entered into a new dimension with fresh equity investment from Sampath Bank Limited, a leading commercial bank of Sri Lanka and First Gulf Asia Holdings Limited, Kingdom of Saudi Arabia, a multi-faceted asset management and investment banking company. In 2004, ONE Bank Ltd was inducted as a shareholder of LankaBangla. The technical support provided by Sampath Bank has been working as a catalyst for LankaBangla to emerge as the most 7 innovative financial solution provider of the country. In November 2006, the paid-up capital of LankaBangla was raised to Tk 350 million, through public subscription of Tk 90 million. LankaBangla now offers a wide range of financial services tailored to the needs of its customers which includes: Credit and Investment Products Lease Finance Term Finance Short Term Finance Working Capital Finance Work Order Finance Car Finance Domestic Factoring of Accounts Receivables Mortgage Loan - Real Estate Developers' Finance - Home Loan Corporate Services Syndication of Lease/Loan Corporate Advisory Services Investment Counseling Card Operation MasterCard Issuing MasterCard Acquiring Third Party Processing Merchant Banking Operation Investors' Portfolio Management Services IPO Advisory Issue Management Underwriting Deposit Schemes Cumulative Term Deposit Periodic Return Term Deposit Double Money Term Deposit Money Builders Term Deposit Stock Brokerage Services LankaBangla established a wholly-owned subsidiary, LankaBangla Securities Limited, to provide customers stock brokerage solutions. Milestones 5th November, 1996 Incorporation of the Company 5th November, 1996 Commencement of Business 8 30th October, 1997 Licensed as Financial Institution by Bangladesh Bank 3rd July, 1997 Registration of First Subsidiary (LankaBangla Securities Limited) 22nd January, 1998 Licensed as Merchant Bank by Securities and Exchange Commission 30th March, 1998 Signing of First Lease Agreement 16th August, 1998 Issuance of First Credit Card 27th April, 2005 Renamed as LankaBangla Finance Limited from Vanik Bangladesh Limited 10th April, 2003 Joining of Sampath Bank Limited, Sri Lanka as Shareholder 10th April, 2003 Joining of First Gulf Asia Holdings Limited, KSA as Shareholder 5th June, 2004 Joining of ONE Bank Limited as Shareholder 5th September, 2005 Launching of MasterCard 6th April, 2005 Commencement of Third Party Processing Business of MarsterCard 17th October, 2006 Listing on Dhaka Stock Exchange 31st October, 2006 Listing on Chittagong Stock Exchange 1st November, 2006 Trading of Share in Stock Exchanges 10th February , 2007 Commencement of Operation of Chittagong Branch