de Union Bank of PLC STATEMENT OF PROFIT OR LOSS Year ended 31 December 2014

BANK GROUP For the twelve months ended For the quarter ended For the twelve months ended For the quarter ended 31.12.2014 31.12.2013 Change 31.12.2014 31.12.2013 Change 31.12.2014 31.12.2013 Change 31.12.2014 31.12.2013 Change Rs.000 Rs.000 % Rs.000 Rs.000 % Rs.000 Rs.000 % Rs.000 Rs.000 %

Interest income 3,972,062 4,129,391 (4) 1,048,090 962,664 9 4,482,731 4,413,133 2 1,196,419 1,046,178 14 Less: Interest expenses 2,209,487 2,973,676 (26) 451,285 728,240 (38) 2,512,194 3,127,200 (20) 531,718 767,372 (31) Net interest income 1,762,575 1,155,715 53 596,805 234,424 155 1,970,538 1,285,933 53 664,701 278,806 138

Fee and commission income 168,720 148,874 13 43,625 34,122 28 322,554 240,627 34 83,717 62,338 34 Less: Fee and commission expenses 43,560 40,453 8 11,055 13,683 (19) 58,620 47,769 23 7,736 16,193 (52) Net fee and commission income 125,161 108,421 15 32,570 20,439 59 263,934 192,858 37 75,981 46,144 65

Net trading income 96,054 120,952 (21) 21,994 39,603 (44) 96,054 120,952 (21) 17,868 13,437 33 Other operating income (net) 309,582 393,535 (21) 82,894 73,631 13 413,069 416,479 (1) 32,756 110,150 (70) Total operating income 2,293,371 1,778,623 29 734,262 368,097 99 2,743,595 2,016,221 36 791,305 448,538 76

Less: Credit loss expense 541,165 328,905 65 262,795 189,381 39 526,528 292,427 80 247,366 142,995 73 Net operating income 1,752,206 1,449,717 21 471,467 178,717 164 2,217,067 1,723,794 29 543,939 305,543 78

Less: Personnel Expenses 660,126 527,388 25 195,251 147,660 32 784,681 632,062 24 215,180 167,653 28 Depreciation & Amortization 270,765 168,787 60 77,655 47,482 64 293,829 202,834 45 72,110 56,142 28 Other expenses 708,619 607,307 17 181,207 186,884 (3) 905,415 740,785 22 268,517 216,990 24 Operating profit before value added tax (VAT) and national building tax (NBT) on 112,697 146,236 (23) 17,354 (203,309) 109 233,142 148,112 57 (11,868) (135,242) (91) financial services Less: VAT and NBT on financial services 51,894 42,269 23 14,924 (28,501) (152) 72,610 42,881 69 16,540 (28,501) (158) Profit before tax 60,803 103,967 (42) 2,429 (174,808) (101) 160,532 105,231 53 (28,408) (106,741) (73) Less: Tax expense 3,715 (8,747) 142 1,065 (60,764) 102 82,335 6,163 1236 9,609 (57,617) 117 Profit for the period 57,088 112,714 (49) 1,364 (114,044) (101) 78,197 99,068 (21) (38,017) (49,124) (23)

Profit Attributable to: Owners of the parent 57,088 112,714 (49) 1,364 (114,044) (101) 31,063 103,928 (70) (47,335) (71,307) (34) Non controlling interests - - - - 47,134 (4,860) 1070 9,318 22,184 (58) 57,088 112,714 (49) 1,364 (114,044) (101) 78,197 99,068 (21) (38,017) (49,124) (23)

Earnings per share Earnings per share - Basic 0.11 0.32 (67) 0.00 (0.33) (100) 0.06 0.30 (81) (0.04) (0.20) (79) Earnings per share - Diluted 0.10 - 100 0.00 - 100 0.06 - 100 (0.09) - (100)

-1- Union Bank of Colombo PLC STATEMENT OF OTHER COMPREHENSIVE INCOME Year ended 31 December 2014

BANK GROUP For the twelve months ended For the quarter ended For the twelve months ended For the quarter ended 31.12.2014 31.12.2013 Change 31.12.2014 31.12.2013 Change 31.12.2014 31.12.2013 Change 31.12.2014 31.12.2013 Change Rs.'000 Rs.'000 % Rs.'000 Rs.'000 % Rs.'000 Rs.'000 % Rs.'000 Rs.'000 %

Profit for the period 57,088 112,714 (49) 1,364 (114,044) 101 78,197 99,068 (21) (38,017) (49,124) (23)

Other comprehensive income Other comprehensive income to be reclassified to profit or loss: Gains and losses on re-measuring available-for-sale financial assets (1,721) 3,093 (156) (2,127) 923 (330) 1,287 4,097 (69) (8,310) (2,728) 205 Net other comprehensive income to be reclassified to profit or (1,721) 3,093 (156) (2,127) 923 (330) 1,287 4,097 (69) (8,310) (2,728) 205 loss

Other comprehensive income not to be classified to profit or loss: Actuarial gains and losses on defined benefit plans (6,157) (698) 783 (6,157) (698) 783 (5,768) (1,342) 330 (7,338) (1,342) 447 Net other comprehensive income not to be reclassified to (6,157) (698) 783 (6,157) (698) 783 (5,768) (1,342) 330 (7,338) (1,342) (100) profit or loss

(7,877) 2,395 (429) (8,283) 226 (3771) (4,482) 2,754 (263) (15,648) (4,070) 284 Other comprehensive income/(loss) for the year, net of taxes

Total comprehensive income for the period 49,211 115,109 (57) (6,919) (113,818) (94) 73,715 101,822 (28) (53,665) (53,195) 1

Attributable to: Owners of the parent 49,211 115,109 (57) (6,919) (113,818) (94) 25,075 106,352 (76) (70,529) (72,236) (2) Non-controlling interest - - - - 48,641 (4,530) 1174 16,864 19,041 (11) 49,211 115,109 (57) (6,919) (113,818) (94) 73,715 101,822 (28) (53,665) (53,195) 1

-2- Union Bank of Colombo PLC STATEMENT OF FINANCIAL POSITION As at 31 December 2014

BANK GROUP 31.12.2014 31.12.2013 Change 31.12.2014 31.12.2013 Change Rs.'000 Rs.'000 % Rs.'000 Rs.'000 % Assets Cash and balances with Central Bank 2,408,572 2,134,479 13 2,689,337 2,182,003 23 Reverse repurchased agreements 10,543,106 1,349,743 681 10,642,158 1,442,352 638 Placements with banks 73,995 314,545 (76) 186,430 314,545 (41) Derivative financial instruments 4,150 1,458 185 4,150 1,458 185 Financial assets - held for trading 2,584,471 989,206 161 2,584,471 989,206 161 Loans and receivables to banks - - 16,004 15,020 7 Loans and receivables to other customers 25,944,570 23,461,925 11 29,217,857 25,347,783 15 Other loans and receivables 2,470,115 2,375,111 4 1,649,134 1,513,485 9 Financial investments - Available for sale 1,647,686 1,736,728 (5) 1,800,750 1,829,596 (2) Financial investments - Held to maturity 140,027 139,556 0 140,027 139,556 0 Investment in real estate - - 258,887 340,147 (24) Investments in subsidiaries 892,364 892,364 0 - - Property, plant and equipment 754,548 1,025,088 (26) 875,933 1,147,115 (24) Goodwill and intangible assets 951,750 53,951 1664 1,304,027 407,576 220 Current tax asset 149,448 94,515 58 149,448 94,515 58 Deferred tax assets - - 515,838 520,774 (1) Other assets 430,318 442,293 (3) 523,918 539,623 (3) Total assets 48,995,121 35,010,962 40 52,558,370 36,824,753 43

Liabilities Due to banks 2,090,588 163,448 1179 2,145,832 192,429 1015 Repurchased agreements 1,116,489 129,450 762 1,095,694 127,154 762 Due to other customers 27,808,891 28,339,687 (2) 30,323,850 29,462,271 3 Other Borrowed Funds - - 845,085 668,154 26 Current tax liabilities - - 181,442 163,604 11 Deferred tax liabilities 25,284 23,964 6 25,915 24,518 6 Other liabilities 1,203,584 897,127 34 1,443,521 992,903 45 Total liabilities 32,244,837 29,553,677 9 36,061,339 31,631,034 14

Equity Stated capital 16,334,782 4,979,791 228 16,334,782 4,979,791 228 Share warrants 65,484 - 100 65,484 - 100 Statutory reserve fund 61,782 58,928 5 69,169 63,272 9 Investment fund reserve - 213,717 (100) - 214,889 (100) Available for sale reserve (78) 1,642 (105) 14,085 14,174 (1) Retained earnings 288,314 203,208 42 (298,854) (351,933) (15) Total equity attributable to equity holders of the Bank 16,750,284 5,457,285 207 16,184,665 4,920,193 229 Non-controlling interests - - 312,366 273,526 14 Total equity 16,750,284 5,457,285 207 16,497,032 5,193,719 218 Total equity and liabilities 48,995,121 35,010,962 40 52,558,370 36,824,753 43

Commitments & Contingencies 24,188,914 20,811,865 16 24,188,914 20,811,865 16

Net asset value per share (Rs.) 15.35 15.63 (2) 15.12 14.87 2

Memorandum Information Number of Employees 724 691 Number of Branches 61 51

-3- Union Bank of Colombo PLC STATEMENT OF CHANGES IN EQUITY Year ended 31 December 2014

Statutory Reserve Investment Fund Available-for-sale Retained BANK Stated Capital Share Warrants Fund Reserve reserve Earnings Total Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 1 January 2013 4,979,791 - 53,299 146,322 (1,451) 286,452 5,464,414 Net Profit for the year - - - - - 112,714 112,714 Other Comprehensive Income - - - - 3,093 (698) 2,395 Total comprehensive income - - - - 3,093 112,017 115,109 Transfers during the year - - 5,629 67,395 - (73,024) - Dividend - - - - - (122,238) (122,238) Balance as at 31 December 2013 4,979,791 - 58,928 213,717 1,642 203,208 5,457,285 Net Profit for the year - - - - - 57,088 57,088 Other Comprehensive Income - - - - (1,721) (6,157) (7,877) Total comprehensive income - - - - (1,721) 50,932 49,211 Issue of share capital 11,354,991 - - - - - 11,354,991 Issue of warrants - 65,484 - - - - 65,484 Transfers during the year - - 2,854 (213,717) - 210,862 - Dividend - - - - - (87,313) (87,313) Share issue expense - - - - - (89,375) (89,375) Balance as at 31 December 2014 16,334,782 65,484 61,782 - (78) 288,314 16,750,284

Statutory Reserve Investment Fund Available-for-sale Retained Non Controlling GROUP Stated Capital Share Warrants Fund Reserve reserve Earnings Total Equity Interest Total Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 1 January 2013 4,979,791 - 53,299 147,494 10,601 (255,131) 4,936,053 274,257 5,210,310 Net Profit for the year - - - - - 103,928 103,928 (4,860) 99,068 Other Comprehensive Income - - - - 3,573 (1,124) 2,449 (220) 2,229 Total comprehensive income - - - - 3,573 102,803 106,377 (5,080) 101,297 Additions to Non controlling interest due to change in ownership interest ------14,149 14,149 Transfers during the year - - 9,973 67,395 - (77,368) - 0 - Dividend - - - - - (122,238) (122,238) (9,800) (132,038) Balance as at 31 December 2013 4,979,791 - 63,272 214,889 14,174 (351,933) 4,920,193 273,526 5,193,719 Net Profit for the year - - - - - 31,063 31,063 47,134 78,197 Other Comprehensive Income - - - - (89) (5,900) (5,989) 1,507 (4,482) Total comprehensive income - - - - (89) 25,163 25,075 48,641 73,715 Issue of share capital 11,354,991 - - - - - 11,354,991 - 11,354,991 Issue of warrants - 65,484 - - - - 65,484 - 65,484 Transfers during the year - - 5,897 (214,889) - 208,992 - - - Adjustment - - - - - (4,390) (4,390) - (4,390) Dividend - - - - - (87,313) (87,313) (9,800) (97,113) Share issue expense - - - - - (89,375) (89,375) - (89,375) Balance as at 31 December 2014 16,334,782 65,484 69,169 - 14,085 (298,854) 16,184,665 312,366 16,497,032

-4- Union Bank of Colombo PLC STATEMENT OF CASH FLOWS Year ended 31 December 2014

BANK GROUP 2014 2013 2014 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Cash Flow from Operating Activities Interest Receipts 4,044,153 3,923,242 4,492,976 4,197,111 Fee and Commission Receipts 125,161 108,421 263,934 192,858 Interest Payments (2,465,361) (2,697,819) (2,930,842) (2,851,342) Receipts from Other Operating Activities 412,761 354,785 526,441 387,049 Payments on Other Operating Activities (1,407,194) (1,165,945) (1,746,682) (1,693,145) Operating Profit before changes in Operating Assets & Liabilities 709,519 522,684 605,826 232,530 (Increase)/Decrease in Operating Assets: Balance with Central Bank of 168,766 510,040 168,766 510,040 Funds Advanced to Customers (3,241,507) (3,651,602) (4,725,727) (4,385,911) Others 9,282 (89,726) 94,273 81,473 (3,063,459) (3,231,288) (4,462,689) (3,794,399) Increase /(Decrease) in Operating Liabilities: Due to banks & other customers (274,306) 4,914,663 1,070,177 5,454,453 Repurchased agreements 986,591 (368,694) 968,091 (265,660) Others 141,950 170,328 434,762 167,805 854,234 4,716,296 2,473,031 5,356,598

Net Cash from Operating Activities before Income Tax (1,499,705) 2,007,693 (1,383,832) 1,794,729 Retiring Gratuity paid (7,587) (2,156) (8,591) (4,114) Income Tax Paid (9,521) (148,860) (65,032) (148,860) Net Cash from Operating Activities (1,516,813) 1,856,678 (1,457,455) 1,641,755

Cash Flow from Investing Activities Dividends Received 11,146 12,883 1,163 3,602 Net Proceeds from Sale/Purchase of shares/ units (1,600,766) 161,487 (1,600,766) 161,487 Investment in Other Financial Assets held for trading (8,995) 120,903 (13,358) 122,893 Investment in Financial Assets available-for-sale 89,043 (170,472) 30,132 (124,431) Financial investments – Held-to-maturity (515) (103,349) (515) (103,349) Purchase of Property & Equipment (218,575) (575,208) (229,589) (643,404) Purchase of Intangible Assets (537,088) (19,453) (537,604) (29,052) Proceeds from Sale of Property & Equipment 161 3,581 161 3,581 Net Cash used in Investing Activities (2,256,073) (569,628) (2,350,377) (608,672)

Cash Flow from Financing Activities Proceeds from shares 11,420,475 - 11,420,475 - Increase/Decrease in Borrowings 1,833,300 (791,517) 2,204,111 (446,966) Share issue cost (89,375) - (89,375) - Dividend Paid (87,313) (122,238) (97,113) (132,038) Net Cash from/(used in) Investing Activities 13,077,088 (913,755) 13,438,099 (579,004)

Net Increase/(Decrease) in Cash and Cash Equivalents 9,304,202 373,295 9,630,267 454,080 Cash and Cash Equivalents at Beginning of the year 3,308,143 2,934,848 3,419,295 2,965,215 Cash and Cash Equivalents at end of the year 12,612,344 3,308,143 13,049,562 3,419,295

Reconciliation of Cash and Cash Equivalents

Cash in Hand and at Banks 1,459,467 1,016,609 1,740,232 1,064,132 Placements with banks 73,995 314,545 186,430 314,545 Due to Banks (141,753) (48,081) (196,998) (77,062) Sri Lanka Government Securities held for trading 680,237 676,031 680,447 676,031 Reverse repurchased agreements 10,540,399 1,349,040 10,639,451 1,441,649 12,612,344 3,308,143 13,049,562 3,419,295

-5- Union Bank of Colombo PLC NOTES TO THE FINANCIAL STATEMENTS As at 31 December 2014

1 LOANS AND RECEIVABLES TO OTHER CUSTOMERS Bank Group 31.12.2014 31.12.2013 31.12.2014 31.12.2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Gross loans and receivables (Note 1.1) 26,558,875 23,994,426 30,648,646 27,058,184 (Less): Individual impairment charges (Note 1.2) (126,310) (165,628) (761,678) (1,043,342) Collective impairment charges (Note 1.2) (487,995) (366,872) (669,111) (667,058) Net loans and receivables 25,944,570 23,461,925 29,217,858 25,347,783

1.1 Loans and Receivables to other customers - by product

Overdrafts 7,489,641 6,642,056 7,489,641 6,642,056 Trade finance 5,803,521 4,613,724 5,803,521 4,613,724 Pawning 1,354,728 2,665,854 1,363,721 2,666,417 Staff loans 321,698 233,412 324,706 233,569 Term loans 10,276,602 8,313,025 11,393,744 9,545,786 Lease and Hire-purchase 954,207 1,157,998 2,883,753 2,162,833 Factoring 358,479 368,356 978,606 689,298 Others - - 410,954 504,501 Gross Loans and Receivables 26,558,875 23,994,426 30,648,646 27,058,184

1.2 Movements in Individual and Collective Impairment Charges during the Period

Individual impairment charges Opening balance 165,628 330,457 1,043,342 330,457 Charge/(Write back) to income statement 92,804 33,558 188,472 20,647 Net write-off during the year (132,122) (198,387) (470,137) (198,387) Other movements - - - 890,624 Closing balance 126,310 165,628 761,678 1,043,342

Collective impairment charges Opening balance 366,872 87,656 667,058 699,813 Charge/(Write back) to income statement 372,580 293,362 253,509 269,795 Net write-off during the year (251,456) (14,146) (251,456) (14,146) Other movements - - - (288,403) Closing balance 487,995 366,872 669,111 667,058

Total Impairment 614,305 532,500 1,430,789 1,710,401

2 LOANS AND RECEIVABLES TO BANKS

Investments in Debentures - - 16,004 15,020 - - 16,004 15,020

-6- Union Bank of Colombo PLC NOTES TO THE FINANCIAL STATEMENTS As at 31 December 2014

Bank Group 31.12.2014 31.12.2013 31.12.2014 31.12.2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000 3 DUE TO OTHER CUSTOMERS At amortised cost 27,808,891 28,339,687 30,323,850 29,462,271

27,808,891 28,339,687 30,323,850 29,462,271

3.1 Deposits Liability Demand deposits (Current accounts) 2,206,541 1,943,945 2,202,984 1,922,901 Savings deposits 4,707,269 3,493,917 4,702,632 3,492,166 Fixed deposits 18,141,270 19,570,531 20,664,423 20,715,909 Other deposits - CDs 2,753,812 3,331,295 2,753,812 3,331,295

27,808,891 28,339,687 30,323,850 29,462,271

-7- Union Bank of Colombo PLC EXPLANATORY NOTES Year ended 31 December 2014

1 The figures are provisional, unless otherwise stated as audited.

2 Interim financial statements are presented in accordance with LKAS 34 - Interim Financial Reporting applicable after 01 January 2012 and there are no changes to the accounting policies and methods of computation as against those disclosed in the Annual Report for the year ended 31 December 2013.

The Group financial statements comprise of the consolidated financial statements of the Bank and its subsidiaries National Asset Management Limited, UB Finance Company Limited and the Special Purpose Entity, Serandib Capital (Private) Limited.

3 The final dividend of Rs.0.25 per share (in the form of cash) for the ordinary shares of the Bank for the year ended 31 December 2013 was paid on 4 April 2014.

4 On 29th of September 2014 Culture Financial Holdings Ltd. (CFHL) acquired 742,156,249 ordinary shares in the Bank representing 68% of the voting rights of the Bank. CFHL has invested Rs.11,420,474,984/70 enabling the Bank to issue 742,156,249 ordinary shares by way of a private placement and 218,281,250 warrants to be exercised within a period of 6 years.

5 Mr. Anil Amarasuriya – Director/CEO of the Bank retired from his position with effect from 15th November 2014.

th th 6 Mr. Indrajit Wikramasinghe was appointed as CEO – Designate with effect from 15 October 2014. He subsequently appointed as Director/ CEO of the Bank from 15 November 2014. 7 No material events have been taken place subsequent to the reporting period that require disclosures or/ and adjustment in the Financial Statements except stated above. 8 Information on Ordinary Shares Market Value 31.12.2014 31.12.2013 Rs. Rs. Market value 25.30 16.60 Highest price for the quarter 27.20 19.60 Lowest price for the quarter 22.50 15.10

-8- Union Bank of Colombo PLC NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2014

SEGMENTAL ANALYSIS - GROUP Corporate Treasury SME Other Group Companies Total 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Interest Income 891,321 1,343,833 616,741 506,359 2,360,579 2,180,975 614,090 381,966 4,482,731 4,413,133 Inter-Segment Interest Income - - - - 522,836 712,268 - - 522,836 712,268 Total Interest Income 891,321 1,343,833 616,741 506,359 2,883,415 2,893,243 614,090 381,966 5,005,568 5,125,400 Total Interest Expense 295,837 445,369 83,056 190,976 1,814,785 2,313,708 318,516 177,146 2,512,194 3,127,200 Inter-Segment Interest Expense 458,662 694,765 64,175 17,503 - - - - 522,836 712,268 Net Interest Income 136,822 203,699 469,511 297,880 1,068,630 579,534 295,575 204,819 1,970,538 1,285,933 Total Other Income 80,272 74,898 194,001 367,269 261,801 204,856 236,983 131,034 773,057 778,057 Total Net Income 217,095 278,597 663,512 665,149 1,330,431 784,390 532,557 335,854 2,743,595 2,063,990 Total Other Expenses 497,952 463,891 446,604 416,056 1,236,118 788,571 329,779 244,902 2,510,453 1,913,420 Segmental Results (280,857) (185,294) 216,908 249,093 94,313 (4,181) 202,778 90,952 233,142 150,570 Vat On Financial Services 72,610 42,881 Taxation 82,335 8,621 Profit After Taxation 78,197 99,068

Other Information Segment Assets 9,102,578 9,653,059 17,394,928 4,049,262 19,411,525 16,600,936 4,761,780 4,671,619 50,670,811 34,974,876 Unallocated Assets 1,887,560 1,849,877 Consolidated Total Assets 52,558,370 36,824,753

Segment Liabilities 2,657,070 5,462,281 2,947,364 127,379 25,671,181 23,552,757 4,035,256 2,232,495 35,310,872 31,374,912 Unallocated Liabilities 750,466 256,122 Consolidated Total Liabilities 36,061,339 31,631,034

Cash flow from operating activities (317,396) 453,123 (282,515) 190,076 (757,056) 779,264 (159,847) 219,290 (1,516,813) 1,641,755 Cash flow from investing activities (472,087) (167,437) (420,206) (70,470) (1,126,028) (288,908) (237,752) (81,301) (2,256,073) (608,672) Cash flow from financing activities 346,649 (159,805) 11,729,028 (67,035) 826,831 (274,826) 174,579 (77,338) 13,077,088 (579,004)

-9- Union Bank of Colombo PLC INFORMATION ON ORDINARY VOTING SHARES OF THE BANK As at 31 December 2014

TOP 20 SHAREHOLDERS

Name of Shareholder No. of shares % holding As at 31.12.2014 1 Culture Financial Holdings Ltd. 763,984,374 70.0% 2 Vista Knowledge (Pte) Ltd. 64,677,973 5.9% 3 Associated Electrical Corporation Ltd. 25,970,146 2.4% 4 Mr. Alexis Indrajit Lovell 22,743,780 2.1% 5 Select Gain Limited. 18,638,774 1.7% 6 Mr. C.P.A Wijeyesekera 18,508,468 1.7% 7 Mr. D.A.J. Warnakulasuriya 14,842,730 1.4% 8 EXSAB International Holding Co. for 8,902,139 0.8% Trading Development 9 Rosewood (Pvt) Ltd - Account No.1 8,443,698 0.8% 10 Ashyaki Holdings (Pvt) Ltd. 7,792,506 0.7% 11 Mr. I.S.Ong 7,550,000 0.7% 12 Mr. S.P.Khattar 7,343,365 0.7% 13 Asian Alliance Insurance PLC-A/C 02 (Life 5,827,256 0.5% Fund) 14 Commercial Agencies (Ceylon) Ltd. 4,050,833 0.4% 15 Ajita de Zoysa & Company Limited. 4,050,832 0.4% 16 PLC/ Dr. T. Senthilverl 4,010,281 0.4% 17 PLC/ Mr. Malik Devapriya 4,000,000 0.4% Samarawickrama 18 Mr. M. D. Samarawickrama 3,660,582 0.3% 19 Standard Chartered Bank Singapore S/A HL 2,875,149 0.3% Bank Singapore Branch 20 Ceylon Biscuits Ltd. 2,000,000 0.2% 999,872,886 91.6% Other shareholders 91,533,363 8.4% Total 1,091,406,249 100.0%

As at 31 December 2014 Number of shares in public holding 220,695,026 Number of public shareholders 34,083 Percentage of public holding 20.22%

DIRECTORS' INDIVIDUAL HOLDING IN SHARES

No. of shares held Director's Name As at 31.12.2014 Mr. Alexis Indrajit Lovell 22,743,780 Mr. Bodahandi Asoka Keerthi de Silva 8,900 Mr. Kin Leong Chong None Mr. Priyantha Damian Joseph Fernando None Mr. Hussain Imtiaz Muhseen None Mr. Mohamed Hisham Sabry Ghouse None Ms. Ayomi Aluwihare None Mr. Ranvir Dewan None Mr. Gaurav Trehan None Dr. P. Jayendra Nayak None Mr. Puneet Bhatia None Mr. Michael J O'Hanlon None Mr. Indrajit Wickramasinghe None

-10- Union Bank of Colombo PLC NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2014

MEASUREMENT OF FINANCIAL INSTRUMENTS

a. Bank - 2014 Available-for- Held for Trading Held to Maturity Total Amortised cost sale Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 ASSETS Cash and balances with central bank of Sri Lanka - - 2,408,572 - 2,408,572 Reverse repurchased agreements - - 10,543,106 - 10,543,106 Placements with banks - - 73,995 - 73,995 Derivative Financial Instruments 4,150 - - - 4,150 Financial assets held-for-trading 2,584,471 - - - 2,584,471 Loans and receivables to other customers - - 25,944,570 - 25,944,570 Other loans and receivables - - 2,470,115 - 2,470,115 Financial investments – Available-for-sale - - - 1,647,686 1,647,686 Financial investments – Held-to-maturity - 140,027 - - 140,027 Other assets - - 16,462 - 16,462 Total financial assets 2,588,622 140,027 41,456,820 1,647,686 45,833,155

Amortised cost Total Rs.000 Rs.000 LIABILITIES Due to banks 2,090,588 2,090,588 Repurchased agreements 1,116,489 1,116,489 Due to other customers 27,808,891 27,808,891 Other liabilities 855,678 855,678 Total financial liabilities 31,871,646 31,871,646

b. Bank - 2013 Available-for- Held for Trading Held to Maturity Amortised Cost Total sale Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 ASSETS Cash and balances with central banks - - 2,134,479 - 2,134,479 Reverse repurchased agreements - - 1,349,743 - 1,349,743 Placements with banks - - 314,545 - 314,545 Derivative Financial Instruments 1,458 - - - 1,458 Financial assets held-for-trading 989,206 - - - 989,206 Loans and receivables to other customers - - 23,461,925 - 23,461,925 Other loans and receivables - - 2,375,111 - 2,375,111 Financial investments – Available-for-sale - - - 1,736,728 1,736,728 Financial investments – Held-to-maturity - 139,556 - - 139,556 Other assets - - 14,470 - 14,470 Total financial assets 990,664 139,556 29,650,273 1,736,728 32,517,221

Amortised cost Total Rs.000 Rs.000 LIABILITIES Due to banks 163,448 163,448 Repurchased agreements 129,450 129,450 Due to other customers 28,339,687 28,339,687 Other liabilities 746,114 746,114 Total financial liabilities 29,378,700 29,378,700

-11- Union Bank of Colombo PLC NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2014

MEASUREMENT OF FINANCIAL INSTRUMENTS a. Group - 2014 Held for Trading Held to Maturity Amortised Cost Available-for-sale Total Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 ASSETS Cash and balances with central bank of Sri Lanka - - 2,689,337 - 2,689,337 Reverse repurchased agreements - - 10,642,158 - 10,642,158 Placements with banks - - 186,430 - 186,430 Derivative Financial Instruments 4,150 - - - 4,150 Financial assets held-for-trading 2,584,471 - - - 2,584,471 Loans and receivables to banks - - 16,004 - 16,004 Loans and receivables to other customers - - 29,217,857 - 29,217,857 Other loans and receivables - - 1,649,134 - 1,649,134 Financial investments – Available-for-sale - - - 1,800,750 1,800,750 Other Financial investments – Held-to-maturity - 140,027 - - 140,027 Other assets - - 28,812 - 28,812 Total financial assets 2,588,622 140,027 44,429,733 1,800,750 48,959,132

Amortised cost Total Rs.000 Rs.000 LIABILITIES Due to banks 2,145,832 2,145,832 Repurchased agreements 1,095,694 1,095,694 Due to other customers 30,323,850 30,323,850 Other Borrowed Funds 845,085 845,085 Other liabilities 855,678 855,678 Total financial liabilities 35,266,139 35,266,139

b. Group - 2013 Held for Trading Held to Maturity Amortised Cost Available-for-sale Total Rs.000 Rs.000 Rs.000 Rs.000 Rs.000 ASSETS Cash and balances with central banks - - 2,182,003 - 2,182,003 Reverse repurchased agreements - - 1,442,352 - 1,442,352 Placements with banks - - 314,545 - 314,545 Derivative Financial Instruments 1,458 - - - 1,458 Financial assets held-for-trading 989,206 - - - 989,206 Loans and receivables to banks - - 15,020 - 15,020 Loans and receivables to other customers - - 25,347,783 - 25,347,783 Other loans and receivables - - 1,513,485 - 1,513,485 Financial investments – Available-for-sale - - - 1,829,596 1,829,596 Other Financial investments – Held-to-maturity - 139,556 - - 139,556 Other assets - - 20,491 - 20,491 Total financial assets 990,664 139,556 30,835,679 1,829,596 33,795,494

Amortised cost Total Rs.000 Rs.000 LIABILITIES Due to banks 192,429 192,429 Repurchased agreements 127,154 127,154 Due to other customers 29,462,271 29,462,271 Other borrowed funds 668,154 668,154 Other liabilities 746,114 746,114 Total financial liabilities 31,196,123 31,196,123

-12- Union Bank of Colombo PLC SELECTED PERFORMANCE INDICATORS As at 31 December 2014

Bank Item 31-Dec-13 31-Dec-14 (Audited) Regulatory Capital Adequacy Core Capital (Tier 1 Capital), Rs. ‘000 15,485,556 5,111,078 Total Capital Base, Rs. ‘000 15,199,541 4,820,464 Core Capital Adequacy Ratio, as % of Risk Weighted Assets (Minimum Requirement, 5%) 42.25% 17.91% Total Capital Adequacy Ratio, as % of Risk Weighted Assets (Minimum Requirement, 10%) 41.47% 16.89% Assets Quality (Quality of Loan Portfolio) Gross Non-Performing Advances Ratio, % (net of interest in suspense) 8.25% 8.24% Net-Non Performing Advances,% (net of interest in suspense and provision) 7.44% 7.80% Profitability Interest Margin, % 4.50% 3.51% Return on Assets (before tax), % 0.16% 0.32% Return on Equity, % 0.69% 2.07% Regulatory Liquidity Statutory Liquid Assets, Rs. ‘000 Domestic Banking Unit 15,298,157 6,282,885 Off-Shore Banking Unit 364,972 276,197

Statutory Liquid Assets Ratio, % (Minimum Requirement, 20%) Domestic Banking Unit 51.12% 22.01% Foreign Currency Banking Unit 22.51% 23.09%

CERTIFICATION: We, the undersigned, being the Chairman, Chief Executive officer, Chief Financial Officer and AVP Finance of Union Bank of Colombo PLC certify jointly that: (a) the above statements have been prepared in compliance with the format and definitions prescribed by the Central Bank of Sri Lanka (b) the information contained in these statements have been extracted from the unaudited financial statements of the Bank and the Group unless indicated as audited

Signed Signed Kusal Perera Malinda Samaratunga AVP Finance Chief Financial Officer

Signed Signed Indrajit Wikramasinghe P. Jayendra Nayak Chief Executive Officer Chairman

Date: 19.02.2015

-13-

Union Bank makes key changes and strengthens its position,

gears itself for new phase of growth

Union Bank of Colombo PLC (UBC) stated that 2014 marked a year of change in its 20 year heritage having received a significant capital infusion of Rs. 11.4 Bn from, Culture Financial Holdings an affiliate of TPG, one of the largest private global investment firms. This investment is one of the largest FDIs to Sri Lanka in the recent times. UBC is well positioned for its next phase of growth with the highest Capital Adequacy Ratio of 41.47% in the industry.

Indrajit Wickramasinghe, Director/CEO of UBC stated that “with a solid foundation, supported by financial stability and global expertise, UBC is redesigning itself as a fully fledge commercial Bank, and is now geared to focus on a bold new world of opportunities and growth. Subsequent to the TPG investment, the Bank reconstituted its Board of Directors and strengthened its Management Team and is putting in place the required resources, products, processes and systems needed to focus on its new aspirations. The successful implementation of the new core banking system brought about significant operational efficiencies and customer service excellence. This new beginning enables us to be even more cognizant to the paradigms ahead of us, powering us to lay the foundation for those changing times ahead; as we focus on achieving the ambitious goals we have set for ourselves.”

Highlighting on its performance UBC group which includes UB Finance Company Ltd and National Asset Management Ltd, reported a pre tax profit of Rs. 233 Mn in comparison to Rs.148 Mn during recorded in 2013. Profit after tax of the Group was Rs78.2Mn for the year ended 31st December 2014. The Bank reported a profit before tax of Rs. 113 Mn for the year. Profit after tax for the year is Rs.57mn.

The Group reported a 53.2% increase in Net Interest Income (NII) during the year, recording Rs.1,970 Mn in comparison to Rs.1,286 Mn in 2013. The Bank NII also increased by 52.5% in 2014 amounting to Rs. 1,763 Mn for the year 2014, compared to Rs. 1,155 Mn posted last year. The primary reason for this was the reduction of Rs 764 Mn in interest expenditure during 2014 due to re-pricing based on the reduction of interest rates and the improvement in the CASA ratio.

The Group’s total assets increased by 42.7% to cross the Rs. 50 billion mark to reach Rs.52,564 Mn in comparison to Rs.36,824 Mn in 2013. This is largely attributed to the capital infusion. The Group has reported a 15.3% growth in loans and advances despite the reduction in the pawning portfolio of the Bank. The Bank’s Loans and advances recorded a growth of 10.6% over 2013. Bank’s subsidiary, UB Finance has recorded a commendable growth subsequent to its focus on restructuring itself during the initial few years after the investment. Total liabilities of the group recorded Rs.4.436 Mn growth resulting in Rs.36,067 Mn as at the year end.

The CASA mix increased significantly to 24.9% from 19.2% in 2013.

Fee and other income of the group recorded a 5.9% growth to be at Rs 773mn for the year in comparison to Rs. 730mn in 2013. National Asset Management Ltd reported a significant growth of 55.6% in fee income. This is attributed to the growth in funds under management in 2014 in comparison to 2013.

Group’s operating income reported a Rs.727mn increase, resulting in a 36% growth overall in comparison to 2013. Total operating income of the Group for the year was Rs.2,743 Mn compared to Rs.2,016 Mn in 2013. The Bank recorded an operating income of Rs.2,293 Mn for the year, which was a growth of 29%.

Expenses of the Group and the Bank increased by 26% during the year. This increase is attributed to significant strategic investments made with regard to the implementation of a new core banking system and branch network expansion initiatives.

Increasing the Bank’s foot print significantly the branch network saw an increase of 70% during the 24 months period leading to December 2014. The Branch network now stands at 61.

The strong operating profit of the Group has been impacted by impairment charges of Rs.526 Mn during the year. Pawning accounted for a substantial component of the impairment. However, the exposure on pawning now stands at 5% in comparison to 11% at the beginning of

the year. A highlighted improvement was recorded in the Bank’s non-performing ratio reaching 7.4% in December 2014 from 11.8% in mid-2014.

Fitch Ratings upgraded UBC’s credit rating to BB+ Stable during the year.

Union Bank is one of Sri Lanka’s leading Bank’s supported by the strength of TPG, the US based global private investment firm with US$65 billion in capital under management and an extensive global network with significant presence in Asia and Europe. TPG’s recent investment of US$117 million in Union Bank marked a milestone in the financial services industry as one the largest foreign direct investments to Sri Lanka. With a solid foundation etched with financial stability and international know-how, Union Bank is amongst the top 5 private commercial Banks in market capitalization in Sri Lanka, offering a full range of products and services to personal and commercial financial sectors.