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Annual Report Commercial Credit Plc

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Annual Report Commercial Credit Plc ANNUAL REPORT COMMERCIAL CREDIT PLC. 2010-2011 Contents 2 2 Purpose. Vision, Mission and Shared Values 1 Graphical Presentation of Key Indicators 2 Financial Highlights 3 Chairman’s Message 5 CEO’s Review 7 Board of Directors 9 A Brief Profile of Board of Directors 12 Corporate Management Team 15 Management Discussion & Analysis 21 Sri Lankan Economy 21 About the Company 23 Product Portfolio 28 Human Capital 30 Achievements 31 Financial Review 33 Corporate Social Responsibility 34 Report of the Board of Directors 37 Risk Management 41 Corporate Governance 42 Report of the Audit Committee 45 Report of the Remuneration Committee 46 Financial Statements 47 Balance Sheet 50 Income Statement 51 Statement of Changes in Equity 52 Cash Flow Statement 53 Notes to the Financial Statements 54 Five Year Summary 80 Investor Information 81 Commercial Credit Network 83 Notice of Meeting 85 Form of Proxy 87 Corporate Information PURPOSE To build leaders who uplift the lives of people by simple acts of love VISION To be the Most Preferred Company admired for its people, partnership and performance MISSION Applying our passion for human values through ethical business opportunities, ensuring development of our staff as individuals and recognizing them, as we contribute to the betterment of our customers through flexible and respectful service, while creating shareholder value SHARED VALUES The Company’s values provide guidance throughout its operations, from strategic planning to day-to-day decision making, and governs the manner in which the Company treats all stakeholders. n Loving and Caring n Integrity and Trust n Learning and Development n Think Win-Win n Synergy and Team Work COMMERCIAL CREDIT PLC. ANNUAL REPORT 2010/2011 1 GRAPHICAL PRESENTATION OF KEY INDICATORS Graphical Presentation of Key Indicators Net Income Net Interest Income 2011 2011 2010 2010 2009 2009 2008 2008 2007 2007 0 180 360 540 720 900 0 160 320 480 640 800 Rs. 000,000 Rs. 000,000 Profit/(Loss) beforeTaxation Profit/(Loss) after Taxation 2011 2011 2010 2010 2009 2009 2008 2008 2007 2007 -30 26 82 138 194 250 0 14 28 42 56 70 Rs. 000,000 Rs. 000,000 Asset Base Loans & Advances 2011 2011 2010 2010 2009 2009 2008 2008 2007 2007 0 1100 2200 3300 4400 5500 0 400 800 1200 1600 2000 Rs. 000,000 Rs. 000,000 Deposits Base 2011 2010 2009 2008 2007 0 800 1600 2400 3200 4000 Rs. 000,000 COMMERCIAL CREDIT PLC. ANNUAL REPORT 2010/2011 2 FINANCIAL HIGHLIGHTS/REVIEW Financial Highlights 2007 2008 2009 2010 2011 (Rs. ‘000) (Rs. ‘000) (Rs. ‘000) (Rs. ‘000) (Rs. ‘000) Net Income 115,463 140,012 162,862 218,765 848,282 Net Interest Income 76,305 103,048 126,666 170,400 702,488 Profit/(Loss) Before Taxation 36,163 32,812 -1,280 -25,942 244,366 Profit/(Loss) After Taxation 39,308 29,334 7,098 45,190 60,094 Asset Base 881,762 1,196,137 1,389,813 2,270,642 5,350,179 Loans & Advances 247,586 241,849 269,603 389,762 1,944,229 Deposit Base 569,043 712,919 854,331 1,732,958 3,840,492 COMMERCIAL CREDIT PLC. ANNUAL REPORT 2010/2011 3 COMMERCIAL CREDIT PLC. ANNUAL REPORT 2010/2011 4 CHAIRMAN’S MESSAGE Chairman’s Message am pleased to welcome you to the 28th Annual General Meeting of Commercial Credit PLC and to present you our Annual Report and Audited Accounts for the financial year 2010/2011. Whilst the results are the best ever in our history, I believe the Company is yet to realise its full potential in Ithis new and exciting environment. It is encouraging to note that our business strategies over the past few years have achieved their aim of growing the business while ensuring its strength and stability. Overview of the Global Economy Notwithstanding the sharp dip in the global economy in 2008 and contrac- tion in 2009, global GDP showed an increase of 3.9% in 2010. While high-income countries recorded a growth despite severe economic strain, developing economies managed a stronger show, recording a growth of 7% - twice as high as that of high-income countries. Consequently, low and middle-income countries contributed towards nearly half of global economic growth, which stood at 46% in 2010. Global GDP is projected to increase only by 3.3% and 3.6 % during 2011 and 2012, with developing economies expanding by over 6% annually. Overall, financial conditions are improving, reinforcing generally positive outcomes which should impact our island nation positively. Outlook for the Sri Lankan Economy This financial year was the first full year of operation following the end of the three-decade-long civil conflict. Seizing the opportunities presented by newfound peace, the economy is emerging from three decades of modest growth to realize its true potential. The country’s economic and financial This financial year witnessed as the consolidation remains a top priority in the pro- first full year of operation subse- cess of economic rehabilitation. quent to the ending of the three-decade- Sri Lanka became one of the fastest growing long conflict, therefore the economy is economies in the world, growing a massive 8% emerging from three decades of modest in 2010, the highest annual growth rate in three decades, while inflation continued to remain low growth to realize its true potential. The around the mid-single digit levels, according to dawn of peace has brought with it oppor- the Central Bank of Sri Lanka. The general deficit tunities for the country’s economic and reduced to 7.9% of GDP in 2010, from 9.9% in 2009. The government plans to further reduce financial consolidation. the budget deficit to 6.8% in 2011 and to below 5% in the medium term. Inflation remained unresponsive at a mid- single digit and market interest rates continued to decline with the Central Bank of Sri Lanka further easing its monetary policy. The financial market remained liquid and public confidence in financial institutions strengthened in tandem with the stringent regula- tory measures adopted by the Central Bank of Sri Lanka during the year. COMMERCIAL CREDIT PLC. ANNUAL REPORT 2010/2011 5 CHAIRMAN’S MESSAGE Company Performance Commercial Credit has performed exceptionally well in the year under review, posting strong financial results and consolidating its reach in the market. We recorded a total revenue of over Rs. 1.2 billion surpassing the Rs.1 billion mark for the first time in the Company’s history. The Company recorded a net profit before tax of Rs.244.36 million during this period, compared with Rs. 25.9 million loss in the previous year. This was due to the 162% growth in the investment base; from 1.7 billion in March 2010 to 4.4 billion in March 2011. These investments were mainly backed by the Fixed Deposit base of the company, which also has grown by 122% from 1.7 billion in March 2010 to 3.8billion in March 2011. The Asset base of the Company recorded a 130.4% growth during the financial year from 2.3 billion in March 2010 to 5.3 billion in March 2011. The efficiency of operation resulting from the implementation of new strategies and focused direction became evident in the Company’s Cost to Income ratio, which dropped significantly to 59% in 2011 from 92% in the preceding year. Appreciation The guidance, support and contribution of the Board of Directors have been invaluable at this time of the Company’s immense growth and expansion, and I wish to express my gratitude for their contribu- tion towards the company’s success. We have grown both in size and reputation, and achieved excel- lent results during the year under review. I also wish to express my sincere appreciation towards the Chief Executive Officer, the highly capable and empowered management team and the members of staff who remain steadfast in their dedication and loyalty towards the Company. I am especially grateful to all our customers, depositors and shareholders for the trust and confidence you have placed in us, enabling us to achieve continuous and sustained growth, even during times of volatility. In an era of promising and exciting opportunities, I am confident that Commercial Credit will continue to lead a revolution in the industry, and play an integral role in redefining the nation’s financial land- scape. Vagdevi Fernando Chairman 17th November, 2011 COMMERCIAL CREDIT PLC. ANNUAL REPORT 2010/2011 6 CEO’S REVIEW CEO’s Review Dear Shareholder, t is with great pleasure that I present you a review of the operations of our Company for the year ended 31st March 2011. 2010/11 was a year of considerable achievements in which I believe we laid a firm foundation for the accomplishment of corporate goals identified at the recently unveiled IThree Year Strategic Growth Plan. A well-planned and executed strategy of New Corporate image, New Innova- tive Products and Modern Infrastructure, together with an empowered work culture has resulted in the Company recording tremendous growth in its deposit and lending base, unprecedented in the sector in the past. The reli- able and user friendly MIS system together with the extended branch reach were the key enabling factors for the remarkable growth of the company. The company has achieved in terms of pre- tax profit a growth of 1142%, and the pre-tax loss of Rs. 25.9 million in March 2010 has improved to a profit of Rs. 244.3 million for the year ending 2011. The increase of profit after Income tax was however marginal at 32.98% due to reversal of previous year’s realized deffered tax asset of Rs 121 million.
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