Lolc Ar 2020 (5mb)

ANNUAL
REPORT
2019/20
ANNUAL
REPORT
2019/20
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LOLC HOLDINGS PLC
Annual Report 2019/20
Contents
29 Financial Services 38 Agriculture

Plantation
&
40 Leisure 44 Renewable Energy
46 Construction 49 Manufacturing 52 Overseas Expansion 57 Investments

& Other Strategic
Trading
About us 3 Report of the Integrated

Group Structure 4 Risk Management Committee 78
Awards and Certifications 6 Report of the Corporate Governance
Funding Partners 8 Committee 79
Our Local Presence 10 Corporate Governance Report 80
Our Global Presence 11 Enterprise Risk Management 85
Financial Highlights 12
Deputy Chairman’s Message 13 Financial Statements
Group Managing Director/CEO’s Review 16 Financial Calendar 90
The Board of Directors 19 Chief Executive Officer’s and Chief Financial
Officer’s Responsibility Statement 91
Management Discussion & Analysis Directors’ Responsibility for Financial Reporting 92
Financial Review 24 Independent Auditors’ Report 93
Financial Services 29 Statement of Financial Position 98
Agriculture & Plantation 38 Statement of Profit or Loss 100
Leisure 40 Statement of Comprehensive Income 101
Renewable Energy 44 Statement of Changes in Equity 102
Construction 46 Statement of Cash Flow 112
Manufacturing & Trading 49 Notes to the Financial Statements 114
Overseas Expansion 52
Other Strategic Investments 57 Property Details of the Company 316
Ten Year Summary 318
Sustainability at LOLC 61 Summarised Quarterly Statistics 322
Value Addition 324
Report of the Board of Directors 71 Indicative US Dollar Financial Statements 325
Report of the Audit Committee 75 List of Group Companies 328
Report of the Talent Development Share Distribution 337
and Remuneration Committee 76 Notice of Meeting 340
Report of the Related Party Transaction Form of Proxy 341
Review Committee 77 Corporate Information IBC
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LOLC HOLDINGS PLC
About Us
20,000++
Financial Professionals
1.8 Mn
Customers
USD 1.2 Bn
Customer Deposits
USD 2.1 Bn
Loan Book Value
The LOLC Group has rapidly evolved into being the biggest Non-Banking Financial
Institution and one of the biggest and most diversified conglomerates in the country.
100++
Besides a range of financial products and services, our portfolio includes leisure, Funding Partners
plantations, agri-inputs, renewable energy, construction, manufacturing and trading and
other strategic investments.
Our footprint in Sri Lanka spans every district, from the rural hinterlands to major cities
and we have enduring business partnerships with a host of financial and developmental
organisations across the world. We have significantly successful financial services
investments in Cambodia, Myanmar, Pakistan, Indonesia, the Philippines, Nigeria and
Zambia; business operations in Maldives and Sierra Leone as well as corporate offices in
Singapore, UAE and Mauritius and we continue to expand our international presence by
actively seeking new opportunities in the region.
As a leading player in Sri Lanka’s SME and microfinance sectors, the LOLC Group has been
a catalyst in facilitating financial inclusion. Our role in microfinance has enabled us to benefit
many people and communities, whilst striving to maximise environmental benefits through
green operations and processes in line with our triple bottom line focus in all we do. The
Group’s business interests are in key growth areas of the economy and we are confident
that LOLC will grow further both in potential and in value creation for the many stakeholders
and partners that we serve.
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LOLC HOLDINGS PLC
Group Structure
4
LOLC HOLDINGS PLC
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LOLC HOLDINGS PLC
Awards and Certifications
This year, LOLC achieved numerous awards and accolades for

the Company’s efforts, as we continued to uplift communities
and realign our business goals and strategies in order to
improve our service standards. As our motivated team journeys
along a pathway to achieve far more in the years to come, we
are confident that the trust and faith of our stakeholders will
ensure business continuity.
For the fourth consecutive year, LOLC was named one of Sri Lanka’s LOLC Placed at number 3 in the Business
LOLC won the Financial Service Provider Most Admired Companies Today Top 30
of the Year award at the SLIM-Nielsen
People’s Awards 2020.
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LOLC HOLDINGS PLC
LankaPay International Business LankaPay

Technnovation Awards Magazine Awards Technnovation Awards
LOLC Finance was awarded the Gold iPay was recognised as the Best LOLC Finance secured the Overall
Award for Non-Banking Financial Payment Platform, Sri Lanka for 2019 Gold Award for Excellence in
Institution of the year for Customer by the International Business Magazine Inter-Bank Payments amongst
Convenience. Awards. Non-Banking Financial Institutions.
IFN Best Islamic Bank IFN Best Islamic Provider

Sri Lanka Award Global Award
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LOLC HOLDINGS PLC
Funding Partners
LOLC’s achievement as a partner in uplifting communities was made possible by its

longstanding international funding agencies which have extended the financial support the
Group needed to achieve its developmental goals. Today, LOLC has forged partnerships with
over 100 funding partners worldwide, whose commitment has sustained our sustainable
inclusive financing approach to empower lives.
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LOLC HOLDINGS PLC
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LOLC HOLDINGS PLC
Our Local Presence
Northern
Province
07 05 01
North - 15
Central
07
North - 10 Province
Western 07 03
Province 06
04 01
Eastern 13
Province
03
Central 14 12 01 05
Province
01
Sabaragamuwa 05 02 06
Province
09 05
Uva
Province
06 04 01
Western
Province 45
08 04 20 Southern
Province 16
12 02 07
as at 31st March
LOLC Finance Footprint Browns
LOLC Finance, Al-Falaah Centres LOLC Development Finance, Branches and

LOLC Finance, Al-Falaah Service Centres Service Centres
Commercial Leasing & Finance (CLC)

Branches
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LOLC HOLDINGS PLC
Our Global Presence
Mauritius
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LOLC HOLDINGS PLC
Financial Highlights
For the year ended 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Group
Performance Indicators -
Rs. Mn
Net profit before tax 8,282 7,068 3,706 4,436 8,169 11,858 24,379 24,655 26,818 27,125
Net profit after tax 7,023 5,704 2,552 3,069 6,299 9,331 20,921 19,190 19,636 19,792
Total assets 113,070 145,204 162,982 167,175 244,917 379,595 640,925 822,239 1,043,747 1,335,919
New executions 47,392 58,233 48,119 65,299 113,048 191,135 152,558 172,673 129,588 129,099
Gross portfolio (Rentals 70,077 105,932 107,038 112,747 172,784 216,763 427,365 560,845 723,822 923,594
receivable)
Deposits from customers 17,899 26,233 35,397 49,615 50,587 74,166 211,128 307,529 452,075 563,942
Outstanding borrowings 49,256 65,425 72,946 68,368 119,232 215,076 294,115 341,549 387,934 503,824
Non-performing portfolio 1,159 1,702 3,071 3,354 4,014 5,054 7,736 10,187 16,791 27,140
Return on equity (%) 25.88 14.62 5.90 7.05 13.16 25.84 35.54 15.05 14.43 12.20
Key Indicators -
Rs. per share
Net asset value per share 27.53 41.22 43.96 47.64 59.41 79.33 123.84 148.28 181.09 194.72
(adjusted)
Earnings per share (adjusted) 8.08 12.00 5.37 3.19 11.37 17.93 36.11 20.47 23.76 22.93
Company
Performance Indicators -
Rs. Mn
Net profit before tax 1,898 3,072 68 689 458 835 10,149 4,763 (3,106) (9,094)
Net profit after tax 1,523 2,977 34 694 504 689 9,777 4,699 (3,184) (9,213)
Total assets 54,213 58,028 53,239 49,254 62,609 75,494 102,007 110,723 124,996 146,241
New executions 5,036 3,926 271 - - - - - - -
Gross portfolio (rentals 11,897 7,704 3,881 2,134 1,378 1,848 850 2,414 2,535 5,565
receivable)
Outstanding borrowings 22,379 23,807 19,738 14,254 25,016 38,369 52,698 54,241 69,895 95,413
Non-performing portfolio 545 500 357 178 168 168 153 149 151 151
Key Indicators -
Rs. per share
Dividends per share - - 0.50 - - - - - - -
Market price per share 119.60 54.00 60.70 75.00 76.60 72.00 61.00 118.00 88.90 88.90
Net asset value per share 15.67 69.97 68.86 71.82 73.44 74.71 98.89 108.85 101.49 98.97
Debt to equity ratio - Times 3.00 0.72 0.60 0.42 0.72 1.08 1.12 1.05 1.52 2.05
Interest cover - Times 1.80 2.19 1.02 1.25 1.27 1.26 2.93 1.78 0.61 0.15
Dividend cover - Times - - 0.14 - - - - - - -
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LOLC HOLDINGS PLC
Deputy Chairman’s Message
The reason for my optimism

is that even with some of
the premature investments
in the portfolio, 80% of our
Profit Before Tax is derived
from overseas investments,
which assures our partners
and shareholders that our
diversified business interests
will always enable the Group
to achieve growth regardless
of challenges in Sri Lankan
operations.
followed by the Presidential Elections

end of 2019 and then the outbreak of the
COVID-19 pandemic in March 2020, which
fortunately did not impact the year under
review in any significant manner although
it will cast a shadow on how the local and
global economy will recover in the next
financial year.
The damage wreaked by the then

government’s debt waiver in 2018 had
Dear Stakeholder, year, notwithstanding the dismal economic already caused irrevocable damage to
The 41st Annual General Meeting of and political climate that prevailed during Sri Lanka’s microfinance sector; the
LOLC Holdings PLC for the financial year the period. The reason for my optimism concession was only granted to arrears
2019/20 is an apt occasion to announce is that even with some of the premature clients discouraging the regular clients. This
the good news to our shareholders and investments in the portfolio, 80% of our adversely affected the healthy recovery
stakeholders that LOLC, as a diversified Profit Before Tax is derived from overseas ratios of over 90% maintained until that
conglomerate, has achieved the distinction investments, which assures our partners point, one of the main reasons for us having
of being the most profitable listed entity in and shareholders that our diversified the attention of many development financial
Sri Lanka for two years in a row, with USD business interests will always enable the institutions. The shock to the system and
7.083 Bn in total assets and a considerable Group to achieve growth regardless of the trickledown negativity is evident to
footprint overseas. Reflecting this strength, challenges in Sri Lankan operations. date even after 18 months. The industry
the Audited Financial Statements I place will take even longer to recover because
before you for the year under review FINANCIAL SERVICES SECTOR it has effectively pushed customers back
mirror the resilience of the Group, which LOLC’s local operations performed to the into the clutches of the informal lending
was able to record a marginal increase best of their ability against a backdrop of market, since the formal sector was
in Profit After Tax to reach Rs. 19.8 Bn multiple shocks to the economy, consisting reluctant to increase exposure under these
compared to Rs. 19.64 Bn in the previous of the Easter Sunday attacks in April 2019, circumstances.
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LOLC HOLDINGS PLC
Deputy Chairman’s Message
Nevertheless, LOLC Finance remained The digital payment platform, iPay, is be the operator for the five-star property
the highest asset-based company by far enabling the Group to aggregate all its on the Southern coast, The Eden Resort &
in the industry with a total asset value in financial services. iPay was also launched Spa with 158 keys and The Paradise Resort
excess of Rs. 192 billion. During the year in Cambodia this year, with implementation & Spa holding 67 Eco-villas in Dambulla.
ended 31st March 2020, LOLC Finance plans in place for launch in Myanmar, Marking another strong relationship LOLC
reported a strong profit signature while Pakistan and Indonesia. The digital payment has with international leisure operators, the
maintaining its deposit book. The company platform has helped LOLC in customer Sheraton Kosgoda Turtle Beach resort, the
was bestowed with several accolades acquisition and to gain transaction volumes. five-star property managed by Sheraton
such as the ‘Financial Institution of the Year As a tech-savvy global player, LOLC will Group, was commissioned for commercial
for Customer Convenience’ and ‘Overall continuously invest in technology and operations in Q4 2019/20.
Gold Award for Excellence in Interbank technology-enabled services to become a
Payments’ at the 2019 Technnovation predominantly ‘phygital’ financial service Furthermore, the year under consideration
Awards. Its Alternate Finance arm, Al- provider. saw us exiting the healthcare business
Falaah bagged some of the topmost while Gal Oya and Maturata plantations and
awards at the IFN Best Banks Global During the year under review, LOLC’s two the Browns Group of Companies performed
Awards, namely, the ‘Best Islamic Leasing Insurance companies performed well, well. Overall, the Group’s strong foothold
Provider’ in the International category growing both captive and non-captive in the plantation sector through Brown &
and ‘Best Islamic Bank in Sri Lanka’ for business, which demonstrates that the two Company PLC continues to yield extended
the second successive year, competing entities are on the right path in a fiercely benefits along the value chain through its
against global industry giants. LOFC’s rating contested sector. Both Life and General contributions in social stewardship.
remained strong at ‘A’ stable with ICRA Insurance businesses achieved regional
Sri Lanka. expansion through Direct and Personal line GLOBAL FOOTPRINT
channels, Broker Unit, Bancassurance and On the other side of the coin, for our
Commercial Leasing & Finance PLC (CLC) strategic partnerships as well as through financial services business, it was also
demonstrated resilience and ended LOLC’s branch network. a year of expansion into new overseas
FY 2019/20 with a strong profit signature, markets, namely, Philippines, Nigeria
while the gross six-month NPL ratio was Meanwhile, our associate company,
and Zambia. Revenue from overseas
far below the industry average. CLC Seylan Bank, recorded positive growth,
operations is the major contributor to
experienced a rise in customer deposits crossing Rs. 500 Bn in total assets.
Group profitability. I am proud to state that
which truly reflects the public perception of Despite a subdued economy, the Bank
LOLC Cambodia has grown to become
the company as a reliable and trustworthy achieved Net Profit growth of 15%. Seylan
the fourth-largest microfinance institution
financial services partner. It also sustained Bank maintained a CASA Ratio of 28%
in terms of portfolio size, recording an
its rating of ‘A’ stable with ICRA Lanka. despite difficult conditions and increased
impressive performance with a 57% YoY
competition.
growth of its earnings to conclude the year
Similarly, LOLC Development Finance
under review.
(LODF)’s strong balance sheet was further NON-FINANCIAL SERVICES SECTOR
affirmed by ICRA Lanka, improving its Our leisure footprint now extends to the LOLC Myanmar, a Greenfield operation
ratings to A- stable on the basis of its Maldives in partnership with The Barceló and the first investment of its kind from
adequate capital structure and asset liability Hotel Group, a world-renowned hotel chain, Sri Lanka in Myanmar, has now become
maturity profile. Despite experiencing which has signed on to manage five leisure the fourth-largest microfinance institution
volatile conditions in the Microfinance properties of Browns Hotels & Resorts in among 174 market players in the country
sector during the 2019/20 financial year, Sri Lanka and the Maldives. This historic in just over five years of operation. Our
LOLC Development Finance was able venture marks Barceló Hotel Group’s entry into Indonesia has seen the company
to surmount prevailing challenges to maiden venture into the Asian region, grow to 20 branches in the regions of Java
deliver improved profitability in the year where they will join Browns Investments and Sumatra Islands. With a population
under review, which reflects the financial in developing three five-star hotels with a of over 265 million and more than 40% of
prudence and expertise that underscores total of 470 keys in North Male Atoll under households classified as ‘very poor’, LOLC
its operations. Bodhufaru, with a value of USD 150 Mn. Indonesia is transforming lives of customers
Barceló will operate these properties along at the bottom of the pyramid.
LOLC’s aggressive focus on the
with a 100-roomed resort in Bodufinolhu in
digitalisation of its businesses and Likewise, our microfinance operations in
the South Ari Atoll, and a mix development
expansion of its digital platforms has Philippines with LOLC ASKI Finance and
- Nasandhura Palace, the most sought-after
positioned it as a major fin-tech player. Inter Asia Development Bank are creating
real estate in Male. In Sri Lanka, Barceló will
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LOLC HOLDINGS PLC
a sustainable social impact. Our success A POSITIVE OUTLOOK

in global markets inspires us to enter new As a group we have tried to seek
markets and we have exciting plans, to opportunity amidst adversity, investing
make forays into new countries in 2020/21. in emerging markets that are still up and
coming. LOLC has always been bold
Our financial services footprint now
and has never shied away from taking
stretches across Cambodia, Myanmar,
calculated risks given our pioneering and
Pakistan, Philippines, Indonesia, Nigeria
adventurous spirit, always tempered by due
and Zambia. Our continuous stride to
diligence, taking the LOLC brand to global
create an impact on the bottom of the
markets.
pyramid in local and global markets to
bring financial inclusion to those who are Given our propensity to enter and exit
usually excluded from mainstream banking businesses at oppurtune moments, we
is evident in how we uplift them from micro continue to build our profit base and
entrepreneurs to SME status through remain hopeful that the new government
focused microfinance solutions. will provide a conducive atmosphere to
bring about economic recovery in Sri Lanka
The year under review also witnessed
whilst the global economy too will hopefully
LOLC’s expansion into Sierra Leone with
bounce back sooner than predicted.
its investment in Sunbird Bio Energy Sierra
Leone Ltd, the largest bio massed power
ACKNOWLEDGEMENTS
generating company in the world with over
I would like to thank the Directors on the
23,500 hectares of an integrated farm that
Board for their guidance and support
also generates sugar and bioethanol. It has
through the year. The Heads of all LOLC
massive potential in generating sugar and
group companies in Sri Lanka and overseas
bioethanol and provides green electricity to
should be proud of their exemplary efforts
the national grid of Sierra Leone.
through the year under review. However, we
have much more ground to cover and many
FOCUSED ON INNOVATION
more milestones to achieve as we expand
As a firm believer of using advanced
our global network of companies. My
technologies for sustainable development,
heartfelt appreciation to our shareholders,
the Group has actively engaged with
funding partners, stakeholders, investors,
innovation-driven, high-tech projects
customers and regulatory authorities for
through its strategic partnership with
their confidence in our operations.
SLINTEC. The graphite-to-graphene
conversion technology developed by
LOLC’s subsidiary Ceylon Graphene
Technology Ltd is expected to accrue
enormous value creation while ensuring
utmost economic and environmental
sustainability in the long run. Ishara Nanayakkara
Deputy Chairman
LOLC’s Research Hub supports farmers
and scientists with technical assistance
that provides solutions for scientific and
engineering initiatives. Environmentally-
friendly projects such as tree planting and
timber forestry are attempts at leaving
behind a greener planet for the next
generation.
15
LOLC HOLDINGS PLC
Group Managing Director/CEO’s Review
Considering the global

nature of LOLC Holdings,
the Group is fortunately not
reliant on macro factors in
any one country. Much like
the previous year, the lack
of opportunity for stronger
growth in the domestic market
was offset by an exceptional
performance by LOLC’s
international operations.
Growth of credit to the private sector

decelerated sharply, driven by subdued
economic activity and weak business
confidence, affecting the performance of
the financial sector.
PERFORMANCE OF LOLC’S LOCAL

OPERATIONS
Considering the global nature of LOLC
Holdings, the Group is fortunately not
The financial year 2019/20 was a test of shareholders soared from Rs. 86.05 Bn
reliant on macro factors in any single
LOLC Holdings PLC’s resilience as despite in the previous year to reach Rs. 92.53
country. Much like the previous year, the
a massive downturn of the economy the Bn in the year under consideration. These
lack of opportunity for stronger growth
Group went on to record a Profit Before solid numbers were a rare occurrence in a
in the domestic market was offset by
Tax (PBT) of Rs. 27.1 Bn (including results year that saw profitability eroding for many
an exceptional performance by LOLC’s
from assets held for sale – PRASAC entities.
international operations.
Micro Finance Institution in Cambodia)
as compared to Rs. 26.8 Bn in 2018/19. OPERATING CONDITIONS
While LOLC’s financial services arm
A satisfactory growth in deposits was Sri Lanka’s economy contracted during recorded growth despite the gloom in the
recorded with the deposit book reaching the year to record GDP growth of 2.3% in rest of the industry, witnessing an increase
Rs. 221 Bn in the year under review, 2019, compared to a growth of 3.3% in in Non-Performing Loans, we performed
in contrast with Rs. 193 Bn (excluding 2018. The Easter Sunday attacks in April better than peers to end the year under
PRASAC results) recorded in the 2019 had a severe impact on the tourism review as the most profitable listed entity.
prior year, despite challenging macro- sector and their adverse spill over effects Diversification into overseas markets
economic conditions. Total Assets grew to were felt across the economy, worsening sustained profitability levels as 80% of the
Rs. 1.34 Tn as compared to Rs. 1.04 Tn the sluggish growth of the economy and group’s top line and bottom line is accrued
in the previous year. Equity attributable to further dampening business confidence. from global operations.
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LOLC HOLDINGS PLC
The only dark cloud on the horizon for Apart from being the most profitable relationships with a wide range of FDIs
LOLC was its leisure arm which could not entity, LOLC is also leading Sri Lankan to promote their development missions
perform as expected due to the terrorist corporates when it comes to technology in the country. In the year under review,
attacks, political uncertainty in the lead and innovation as we have launched several CLC managed to protect its portfolio and
up to the presidential elections and the digital initiatives in our financial services the profit signature by recording a PAT
outbreak of the global pandemic thereafter, business creating significant value to our growth of 29% YoY to Rs. 1.5 Bn despite
which has brought tourism to a halt globally. customers, bringing them closer in all challenging macro-economic situations.
The Group’s leisure portfolio in Sri Lanka transactions. Improved resource efficiency The company holds a Rs. 69.6 Bn asset
is now made up of 5 operational resort is achieved through digital solutions that base and Rs. 24.9 Bn deposits as at
hotels with the commissioning of 172 facilitate remote operations. FY2019/20.
roomed Sheraton Kosgoda Turtle Beach
Resort during 4Q of FY19/20. The Riverina In the non-financial services segment, the LOLC Development Finance PLC, formerly
Hotel development project in Beruwala is Browns Group of Companies underwent known as BRAC Lanka PLC, made a
currently underway, which once completed digitalisation to improve delivery channels strong recovery in the year under review
will be one of the largest five-star resorts in and customer service. by recording Rs. 176 Mn PBT from a loss
the country. of Rs. 140 Mn in the last year following
In spite of the challenging and unexpected the alignment of its business strategies on
The Group made a bold move to tap into external shocks, LOLC Finance PLC (LOFC) restructuring the inherited SME portfolio.
the Maldives leisure sector over the last sustained its market leadership position The company has been able to reduce its
few years, securing some of the most amongst the Non-Banking Financial credit loss provisioning by 35% through
sought-after properties in Male as well as Institutions (NBFIs) with an asset base the implementation of prudent strategies
other atolls in the Maldives, assuring an of Rs. 192 Bn, a portfolio of Rs. 134 Bn to improve collection and recoveries. The
even more diversified leisure portfolio. The and deposits of Rs. 99 Bn. The company company holds a Rs. 18.4 Bn asset base
Nasandhura Mixed Development project posted Rs. 3.8 Bn Profit After Tax (PAT) and Rs. 2.6 Bn deposits as at FY2019/20.
in Male is expected to be operational soon in the year under review. As the leading
and will be the largest mixed development impact lender, LOFC holds the largest Seylan Bank, an associate of the LOLC
project in the Maldives. The resort hotel pool of Development Finance Institutions Group, also contributed Rs. 1.3 Bn to the
with 100 keys in Bodufinolhu atoll is (DFIs), guiding their respective development Group’s profits.
planned to be opened by early 2021. goals for Sri Lanka. The funding lines and
the wide array of technical assistance The Group holds its footprint in the local
During the year under consideration, the provided by these DFIs through LOFC have plantation sector through Maturata and
Group remained agile and leveraged on transformed the grassroots of the economy. Gal Oya plantations, where the business
lower interest rates seen in the latter part Continuing the Group’s legacy of expanding focus lies in the value addition of cinnamon
of the year to manage treasury operations strategic international alliances, LOFC products and sugarcane cultivation. LOLC
astutely with calculated risk in short-term signed a loan agreement with Swedfund, could also reap the benefits of having
borrowing and lending for longer tenors. On the Swedish Government’s Development market leaders like Agstar Fertilisers and
the deposit side, innovative products were Finance Institution to promote financial Browns with agricultural supplies and
launched to grow the deposit base, strongly inclusion and gender equality. Attesting the equipment to complement the value chain.
backed by the trusted LOLC credentials. Group’s good business practices, LOLC
The Group exited from its healthcare
Micro Credit Limited (now merged with
The Group’s insurance arm continued assets due to the challenging regulatory
LOFC) became the 1st Sri Lankan MFI to
to perform strongly through the year environment of the sector by disposing
be awarded the Client Protection Principles
under review, carving out substantial new Browns Hospital in Ragama for a
Certification from the SMART Campaign
business outside of the group, which consideration of Rs. 1.6 Bn.
(a global initiative which exists to ensure
reflects that the positioning and value strong client protection practices in the
proposition are well aligned to the needs PERFORMANCE OF GLOBAL GROUP
microfinance industry).
of the market. LOLC Life Assurance and OPERATIONS
LOLC General Insurance demonstrated an Commercial Leasing and Finance PLC As for our performance in global markets,
impressive performance during the year by (CLC) has been instrumental in driving LOLC achieved the privileged position of
recording Rs. 1.5 Bn PBT in comparison the Group’s vision of financial inclusion in having its group company, LOLC Cambodia
to a loss of Rs. 175 Mn recorded in the the country as a leading credit supplier. PLC, achieve billion dollars in assets within
preceding year. The company has also established strong a mere six years of entering the Cambodian
17
LOLC HOLDINGS PLC
Group Managing Director/CEO’s Review
market. LOLC is making a difference in the The COVID-19 fallout which will be seen
Micro and SME landscape by deploying in 2020 and beyond will be the biggest
best practices in customer protection, challenge for the management but we have
customer experience, risk management charted turbulent waters in the past and are
and the application of digital technology. confident of navigating the year ahead.
Our spirit of entrepreneurship continues to
define our growth as we make forays into APPRECIATION
Africa and explore investment opportunities I would like to place on record my gratitude
in India - emerging markets with large to the Deputy Chairman and the Board
populations which provide fertile ground for of Directors for their unstinted support.
our microfinance services. I would also like to thank the regulators,
shareholders, funding partners, business
In the last quarter of 2019/20, LOLC
associates and customers for standing
received regulatory approval from the
by the LOLC Group. The staff across the
National Bank of Cambodia and the
Group has demonstrated their commitment
Financial Services Commission of Korea
and loyalty by working towards making
to sell the company’s 70% shareholding
LOLC the most profitable entity.
in PRASAC Micro Finance Institution in
Cambodia for USD 603 Mn. This is a
landmark transaction not only for LOLC,
but also for the country as it surpasses any
private sector foreign transaction carried
out in the history of Sri Lanka.
W D K Jayawardena
FUTURE OUTLOOK Group Managing Director/Chief Executive
As a Group, we remain confident about Officer
local business growth and expansion no
sooner economic and political stability
is achieved in the country. The short to
medium term prospects for the leisure
business will remain under pressure due
to the challenges posed by the pandemic.
Our foray into new markets such as
Malaysia, India, Africa, Vietnam and South
America are in their embryonic stages.
The Group will continue to focus on the
SME and Micro lending sectors and look
to harness the dividends from its overseas
investments and continue to empower
more entrepreneurs in Sri Lanka and across
the shores through our unique microfinance
model.
18
LOLC HOLDINGS PLC
The Board of Directors
Mr. I C Nanayakkara Mr. W D K Jayawardena
Mrs. K U Amarasinghe Mr. Conrad Dias
Dr. R A Fernando Deshamanya M D D Pieris
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LOLC HOLDINGS PLC
Mr. Ishara Nanayakkara innovative spirit, the Group has ventured Mr. Jayawardena served in the following
Deputy Chairman into many bio-tech businesses, including Boards/Committees:
conversion of pure graphite to graphene,
Mr. Ishara Nanayakkara is a prominent incorporating technological advancements, • Chairman of the Sri Lanka Banks’
entrepreneur serving on the Boards of creating value to the Group’s plantation Association (SLBA) in 2003/04
many corporates and conglomerates portfolio of cinnamon, tea, sugarcane,
• President of the American Chamber of
internationally. Coming from a strong rubber, and bi-products. Investments in
Commerce in Sri Lanka in 2006/2007
business background, involved in their renewable energy in both, Sri Lanka and in
family enterprises, he ventured into the Sierra Leone, with the largest sugar-based • Member of the Financial Sector Reforms
arena of financial services with a strategic bio ethanol and power plant in Africa, has Committee (FSRC)
investment in LOLC Holdings PLC and was added multi-dimensional know how to his
appointed to the Board in 2002. In less than versatile business portfolio. • Member of the National Council of
two decades, Nanayakkara has navigated Economic Development (NCED)
LOLC to become not only a financial Nanayakkara is a featured businessman in
conglomerate but the most profitable the international community, recognised for • Board Member of the United States - Sri
conglomerate in the country making a his invaluable contribution to Micro Finance Lanka Fulbright Commission.
significant impact in the global financial in particular, by independent international
platforms such as INSEAD business school Mr. Kapila Jayawardena joined LOLC in
arena as the first Sri Lankan company with
including winning the prestigious ‘Young the year 2007 as the Group Managing
a dynamic MSME platform in the Afro-
Entrepreneur of the Year’ Award at the Asia Director/CEO and is the Chairman/Director
Asian regions.
Pacific Entrepreneurship Awards (APEA) of the following companies and is also on
Over the years, reputed financial institutions back in 2012. He holds a diploma in the Boards of the subsidiaries of the LOLC
in Sri Lanka, Cambodia, Myanmar, Business Accounting from Australia. Group.
Pakistan, Indonesia, Philippines, Singapore,
He is the Executive Deputy Chairman of Chairman
Zambia, and Nigeria has reaped benefits
from his extensive knowledge in the Micro LOLC Holdings PLC, Executive Chairman Eden Hotel Lanka PLC
Finance business and MSME markets. He of Browns Investments PLC, Brown & LOLC General Insurance Ltd
was also instrumental in setting up Life Company PLC and the Chairman of Sri LOLC Securities Limited
and General Insurance businesses in the Lanka Institute of Nanotechnology (Pvt) Palm Garden Hotels PLC
Group and pioneered the concept of Micro Ltd. He also sits on several other boards
of Group companies both locally and Director
Insurance in Sri Lanka and Cambodia. His
business acumen extends to the growth overseas. Seylan Bank PLC
sectors of developing economies with LOLC Development Finance PLC
notable investments in Leisure, holding Mr. W D K Jayawardena
Brown & Company PLC
one of the largest hotel portfolios in Sri Group Managing Director/Chief Executive
Riverina Resorts (Private) Limited
Lanka and Maldives in addition to other Officer
key investments in construction, plantation, LOLC International (Private) Limited
trading, manufacturing and more recently in Mr. Kapila Jayawardena holds a MBA Browns Investments PLC
uniquely innovative scientific initiatives. in Financial Management and is a fellow
LOLC Advanced Technologies (Private)
member of the Institute of Bankers and
Limited
Nanayakkara continues to spearhead all an Associate Member of the Institute of
strategic decisions of the LOLC group, Cost and Executive Accountants, London. LOLC Asia (Private) Limited
both in financial and non-financial sector He served as Country Head and CEO (Sri LOLC Private Limited
investments, with his vision for LOLC, Lanka and Maldives) of Citibank NA from Ceylon Graphene Technologies (Private)
being well executed with precision and 1998 to 2007. Limited
commitment to create long term value for
He has varied experience in the fields of LOLC Africa Holdings (Private) Limited
all stakeholders.
Investment Banking, Banking Operations, Leapstitch Technologies (Private) Limited
He holds many prestigious positions Audit, Relationship Management, Corporate
including the Chairmanship of the Sri Lanka Finance, Corporate Banking and Treasury
Institute of Nano-technology, the national Management.
arm for advanced technological solutions
based on Nano technology. Known for his
20
LOLC HOLDINGS PLC
Mrs. K U Amarasinghe and Founder of OYES another fintech Sri Lanka network in 2010 and is a Director
Executive Director platform making everyday a payday. of UNGC Sri Lanka Board. He is Chairman/
CEO of Global Strategic Corporate
Mrs. Kalsha Amarasinghe holds an His thought leadership on technology Sustainability Pvt.Ltd which currently
Honours Degree in Economics and has and contribution in the field of ICT to operates in Vietnam, Sri Lanka and China.
an outstanding vision for investments. She the industry, society and in LOLC Group He also serves as a Director on the Boards
serves on the Boards of subsidiaries of was recognised by many local and of Aitken Spence Plantations Limited,
Browns Group of Companies and LOLC international awards including prestige’s Ceylon Asset Management Ltd and Habitat
Holdings PLC. Computer Society of Sri Lanka CIO of
for Humanity.
the year 2016. He was also award and
Other key appointments: Executive Chartered Management Institute of Sri His career with Multi-nationals spanned
Director – LOLC Holdings PLC, LOLC Lanka Professional Excellence Award 2017. 1981-2003, Unilever, Sterling Health
Finance PLC and Director of LOLC Life Further he was inducted to Global CIO Hall International, Smithkline Beecham
Assurance Limited, Palm Garden Hotels of Fame 2020 of IDG CIO100 and only Sri International covering Africa, Middle East
PLC, Riverina Resorts (Pvt) Ltd, Eden Hotel Lankan to get this accolade. and Asia in CEO/Managing Director,
Lanka PLC, Brown & Co. PLC, Browns Business Development and Marketing
Investments PLC, Green Paradise (Pvt) Ltd, He was the former Group CIO and
Management positions between 1981-
currently functions as the Director/CEO of
Browns Holdings Ltd, Danya Capital (Pvt) 2007. He was the first CEO SLINTEC (Sri
LOLC Finance PLC and Chairmen LOLC
Ltd, Melana Capital (Private) Limited, and Lanka Institute of Nanotechnology) 2008-
Technologies Ltd. He is also a founding
Ultimate Sports (Pvt) Ltd. 2010 and was a member of the National
board member Digital Mobility Pvt Ltd
Task Force on Development of the 5year
popularly known as PickMe. Director
Mr. F K C P N Dias Science and Technology strategy 2010.
ODoc Pvt Ltd again a successful start-up
Non-Executive Director
telemedicine platform and holds other In Academia, He was a visiting faculty
Mr. Conrad Dias was appointed to the directorships of overseas subsidiary
member of the INSEAD Advanced
companies.
Board on 4th September 2019. He holds Management Program from 2005-2010
Masters in Business Administration (MBA) teaching the subject ‘Strategic Corporate
Dr. R A Fernando
from the University of Leicester UK, Fellow Sustainability’. He is an Executive in
Member of Chartered Management Independent Director Residence at the INSEAD Social Innovation
Accountants UK (FCMA), Chartered Global centre since September 2010 to date. He
Dr. Ravi Fernando is a Blue Ocean
Management Accountant (CGMA -USA), is also on the visiting faculty of the Deusto
Strategist with a sustainability mind set. He
He is also a Fellow of Certified Management Business School (Bilbao) and Univiersitat
is an Alumni of the University of Cambridge
Accountants of Sri Lanka (FCMA) and having completed the Climate Leadership of Pompeu Fabra (Barcelona) in Spain
British Computer Society (FBCS). Programme in 2007, a Post Graduate and University of Colombo MBA teaching
Certificate in Sustainable Business at ‘Strategic Corporate Sustainability’.
His experience spans over 3 decades BABSON College published three Case
Cambridge University in 2008 and a Master
as a visionary thought leader in business studies on his work experiences in Kenya
of Studies in Sustainability Leadership at
technology and his C-Level experience and Vietnam in the GVV series in 2012-14
Cambridge University in 2014. He was
spans over 20+ years. He is seasoned and was involved in over 7-8 Case studies
a Wolfson College alumni at Cambridge
veteran in Business Management, at the INSEAD business school between
University. He holds a Doctor of Business
Information Technology Management, 2006-2010.
Administration Degree from the European
Software Engineering, Project Management,
University in Geneva 2016.
Strategic and Investment Planning, Finance In November 2015 he published ‘Strategic
Management, Corporate Restructuring and He also holds a MBA from the University of Corporate Sustainability – 7 Imperatives for
Unit Trust & Fund Management. He has Colombo and is a Fellow of the Chartered Sustainable business’ (Partridge: Penguin
the domain expertise in sectors such as Institute of Marketing (UK), He holds a Random House), based on his work at
Information Technology, Trading, Banking Diploma in International Management and Cambridge University.
and Finance, Insurance, Portfolio/Asset completed the Advanced Management
Management and Manufacturing Sectors. Program at the INSEAD Business School in In September 2007 he won a “Global
(France). Strategy Leadership award” at the World
Fintech enthusiast who innovated many Strategy Summit for his work on Ethical
financial technology products and He was the United Nations Global Compact branding in the Apparel and Tea sectors
solutions and he is the Founder of iPay a Focal point for Sri Lanka 2003-2010 and receiving the award from Prof Renee
revolutionary platform beyond payments was the founder of the UN Global Compact Mauborgne of INSEAD business school.
21
LOLC HOLDINGS PLC
Deshamanya M D D Pieris United States of America and Chairman S. a Vice President of the meeting in which
Independent Director W. R. D. Bandaranaike National Memorial role he chaired the ministerial meeting
Foundation Board which governs the B. M. on occasion and was also elected as a
Deshamanya M.D.D. Pieris is a graduate of I. C. H., the B. C. I. S. and The Sirimavo member of the Credentials Committee.
the University of Ceylon (Peradeniya); Fellow Bandaranaike Convention Hall.
of the Chartered Management Institute, He has also lead the Sri Lanka delegation
UK and has been conferred the Degree of He has also served on the Governing to the Annual sessions of U. N. E. S. C.
Doctor of Letters (Honoris Causa) by the Councils or Boards of Management in O. in Paris and been a Senior member of
University of Colombo. Doctor of Letters several Universities and Post Graduate delegations to the Non aligned conference
(Honoris CAUSA) by the University of Institutes, including the council of the in Colombo and to ministerial meetings
Westminster (UK) and the title of Honorary University of Colombo; the Board of of agriculture at F. A. O. in Rome and of
Senior Fellow by the Post Graduate Institute Management of the Post Graduate Institute Commonwealth Education ministers in
of Medicine. He is also “A Distinguished of Medicine; the University of Colombo Barbados and Islamabad.
Fellow” of the institute of National Security School of Computing; the Council of the
Buddhist and Pali University; The Board He has also been either leader or Senior
Studies - Sri Lanka.
of Management of the Arthur C. Clarke member of various official delegations on
His career was in the then Ceylon Civil Centre of the University of Moratuwa; the the subjects of food; agriculture; trade;
Service and later, on the abolition of that Post Graduate Institute of Archaeology of Education; and public administration and
service in the Sri Lanka Administrative the University of Kelaniya and The Post Governance for meetings held in the U.
Service. Graduate Institute of Management of the S. A., Britain, France, Germany, Sweden,
University of Sri Jayawardanapura. Norway, Switzerland, Australia, India,
He had a distinguished career in the Pakistan, China, Malaysia, Singapore,
public service and held several important He has been a Director at People’s Bank, Thailand, Indonesia, Burma, The
posts, including that of the Secretary to the People’s Merchant Bank, Merc Bank Philippians, Japan, Egypt, The Soviet
the Prime Minister; Secretary, Ministry of and a Member of the Rural Credit Advisory Union, South Korea, Libya, Italy, Mexico,
Public Administration, Provincial Councils Committee of the Central bank. Barbados & Canada.
and Home Affairs; Secretary, Ministry of
Agriculture, Food and Cooperatives & He has also from time to time served on the He has served as a Member of the National
Secretary, Ministry of Education and Higher Governing Boards of the National Institute Salaries Commission; a Member of the
Education. of Plantation management; of The National Presidential Commission on Finance
Human Resource Development Council; and Banking and has chaired three
He has also acted on several occasions The Ceylon Shipping Corporation; The presidential Committees - one to examine
in addition to his duties, in the post of Cooperative wholesale establishment, Sri and report on the proposed mechanised
Secretary to the Ministry of Defence and Lanka film corporation; National Education gem mining in the KALU GANGA; the
External Affairs and Secretary to the commission; The Sri Lanka Foundation other on the Functioning of the Survey
Ministry of Trade and Shipping. Institute; The National Committee on Department, and the third on the Sri Lanka
Women; The National Council for Elders; Foreign Service. He was a member of a
He has at various times been the Chairman
Mahapola Higher Education Scholarship Presidential committee tasked “To identify
of the National Institute of Education;
Trust; The National Institute of Social and study the problems of the university
Chairman, Board of Management of
Development; Member Board of Trustees system and to make recommendations”.
the Sri Lanka Institute of Development
of the Tower Hall Foundation; member He was a member of a senior officials
Administration; Chairman of the - Agrarian
- Advisory Committee on Regional committee appointed by the Cabinet and
Research and Training Institute; Chairman
Cooperation in Education in Asia and Chaired by the Governor of the Central
of the Public Sector Infrastructure
the Pacific appointed by the Secretary Bank tasked with producing a report on
Development Company; Chairman of
General of U. N. E. S. C. O; Governor for the overall subject of poverty alleviation.
the National Development Trust Fund,
Sri Lanka on the Governing Board of the This report was termed the Janasaviya
Chairman and Director General of
S. A. A. R. C. Centre for Human Resource report and formed the basis for setting up
Broadcasting; The Executive Vice Chairman
Development - Islamabad Pakistan. He the Janasaviya Trust. He was a member
- Sri Lanka National Commission for U. N.
led the Sri Lanka Delegation to the 51st and later Chairman of the Panel of Legal/
E. S. C. O. and Chairman of The National
E. S. C. A. P. meeting of ministers held in Constitutional experts appointed by the
Eisenhower Award Nomination Committee
Bangkok, Thailand in 1995 and was elected President to serve the National All Party
on the Invitation of the Ambassador for the
22
LOLC HOLDINGS PLC
Conference on constitutional reform. He contributed articles to several

had severed from time to time as Senior commemoration publications including the
Adviser in the Ministry of Foreign Affairs; 50th Anniversary commemoration volume
Science and Technology; Tourism; and of the University of Peradeniya and the
Justice. Prime Minister Sirimavo Bandaranaika
commemoration volume.
Currently, he functions as the Chairman of
the Board of Management of the Institute of He has published his memoirs of his
Information Technology and serves on the experience in the public service of Sri
Board of Directors of LOLC Holdings PLC; Lanka in a book titled “In the pursuit of
the Governing Board of the Regional Centre governance”.
for Strategic Studies; and on the Board of
Management of the Institute of Indigenous
Medicine of the University of Colombo.
He is also a member of the Academic
Affairs Board for Post Graduate Studies
of the Sri Lanka Institute of Development
Administration (S.L.I.D.A); the Board of
Management of the SANASA Campus;
a Director of the Mercantile Merchant
Bank / Pathfinder Group and a member
of the Board of Governors of VIDYODAYA
PIRIVENA - Maligakanda
Desamanya Pieris also lectures from time to

time on invitation, at S.L.LD.A.; the Defence
Services Command and Staff College
at Sapugaskanda; the Bandaranaike
International Diplomatic Training Institute
and the Kotelawala Defence University and
at senior level training courses at various
institutions.
He has delivered four convocation

addresses, at the University of Colombo;
Sri Jayawardenapura; Ruhuna and the
Open University. He has, also on invitation
delivered four Memorial Orations - the
Lalith Athulathmudali Memorial Oration; the
Sir Ponnambalam Arunachalam Memorial
Oration: the Vidyajothi Professor V. K.
Samaranayake Memorial Oration; and
the Senator Dr. A. M. A. Azeez Memorial
Oration, He has also been conferred the
high National Honor of “DESHAMANYA”
for “Distinguished Service of a highly
meritorious nature to the Nation”.
He has written the foreword to several

books authored by distinguished
professionals in various fields and
23
LOLC HOLDINGS PLC
Management Discussion & Analysis
hence the disposal results are not reflected The Cost of funds of the Group increased
Financial Review in the current year financial performance. by 13% arising mainly from the foreign
subsidiaries with a 77% increase, in line
The Group consists of Financial with business growth. The local companies’
Services, Insurance, Leisure, Plantation, borrowing costs saw a 1% decline due to
Construction, Manufacturing and Trading. the reduction in the portfolios.
The year under review was a challenging
The gross income of the Group reached
year for all businesses in general, due
Rs.130 Bn, recording a growth of 5% The Total overheads of the Group increased
to emerging new threats and other
compared to the previous year’s Rs.124 by 23% to Rs. 62 Bn from Rs. 50 Bn in the
unfavourable economic conditions.
Bn. A significant contribution came previous year.
Despite these adverse outcome, the
from the financial services sector for the
Group was able to maintain resilience to Personal cost increased by 17% mainly
increase in interest income representing
negative economic impacts maintaining due to the increased activities of financial
80% of the Group’s top line. The growth
strong bottom-line performance in several services sector companies in foreign
in interest income from financial services
businesses as well as good pattern countries. The drop-in assets quality due
after charging interest expenses recorded
of business expansion in line with its to adverse economic conditions in the
a net interest of Rs. 55 Bn for the financial
expansion strategy. The Group recorded country led to slow collections increasing
year. The insurance segment which reflect
a Top line of Rs.130 Bn and Profit After impairment losses by 50% to Rs. 17
the performance of LOLC Insurance, both
Tax (PAT) of Rs.19.8 Bn. The steady Bn from Rs 11 Bn in the previous year.
General and Life insurance, has shown a
performance of the overall the Group In response to increasing impairment
remarkable increase in premium income
conforms the decision to diversify and charges due to rising NPAs, the Group
and profitability. The Gross income of the
expand its operations in foreign markets strengthened its recovery operations by
insurance sector increased to Rs. 7.8 Bn
which yield stronger bottom line results. focussing and monitoring on collections
from Rs. 6.8 Bn recorded in the previous
year due strong growth in business efforts. The charge on depreciation and
The commitment to deliver exceptional
volumes. The other key contributor to amortisation increased to Rs. 4.1 Bn from
results has been a consistent long term
the Group top line is from the trading and Rs. 2.1 Bn due to depreciation of new
goal of the Group with all strategies of
manufacturing segment with a contribution assets added to the Group from Sunbird
businesses being focused on this goal and
of Rs. 25 Bn to the top line which mainly Bio-energy Sierra Leone Ltd, a subsidiary
this has triggered focused efforts being
comes from the sales revenue of Brown of the Group engages in plantation of sugar
made to enhance business growth in all
& Company PLC. Group revenue which cane, amounting to Rs. 1.1 Bn. Further,
sectors. In line with these decisions the
comprises of revenue from trading, leisure, the amortisation expense of Right to used
announcement of the plan to dispose its
plantation and renewable energy increased assets under SLFRS 16 had an impact of
major investment, PRASAC Microfinance
marginally by 1% compared with the Rs. 638 Mn
Institution Limited, a 70% owned subsidiary
of the Group was made at the end of previous period. Plantation sector recorded
The Group recorded PBT from continuing
the financial year. PRASAC, the maiden a slight increase in revenue compared with
operation of Rs. 3.4 Bn from Rs. 9.5 Bn
foreign investment of LOLC contributes the last year
recorded in the previous year. Group PBT
strong positive results at all levels and was includes Rs. 1 Bn share of profits of equity
significant and very important. Gross Income (Rs. Mn.) accounted investees mainly with profit
150,000
attributable from Seylan Bank PLC. PBT
Due to the imminent disposal decision for
also includes a negative goodwill amounting
PRASAC, the financial results of PRASAC 120,000
to Rs. 6 Bn, recognised in the acquisition of
has been classified under discontinued
90,000 Sunbird Bio-energy Sierra Leone Ltd during
operation in the financial statements
the year. Among the top contributors to the
presented and all the reviews pertaining to 60,000
Group PAT was the financial service sector
continued operations have been presented,
contributing Rs. 24.8 Bn representing 91%
excluding the results of PRASAC. Previous 30,000
to the overall profitability of the Group,
year results too have been adjusted in order
0 inclusive of contribution from PRASAC
to make a comparison with the current 2015 2016 2017 2018 2019 2020
which accounted for Rs. 19 Bn.
year results. Financial results of PRASAC is
given under discontinued operations and is The total asset base of the Group increased
included in arriving at Group’s PBT. Since to Rs. 1,336 Bn from Rs. 1,044 Bn from
disposal of the investment came into effect the previous year. The lending portfolio of
subsequent to the financial year-end and
24
LOLC HOLDINGS PLC
the Group increased to Rs. 331 Bn. The The company recorded a loss of Rs 9.2 Bn with the implementation of fintech solutions,
continuous expansion of financial services mainly due to the reduced level of activity in focussing more on asset backed lending.
in to international markets resulted in a realising investments, by way of disposals.
strong growth momentum and the LOLC Despite the losses recorded during the year, LOFC reported Rs. 38 Bn interest income
Group’s footprint kept expanding across the total equity which shows the strength during the year, down by 11% compared
the region. The equity attributable to of an investment company was maintained to the previous year, due to the reduction
shareholders of the company increased at Rs. 47 Bn together with an asset base of in portfolio growth. Interest income from
to Rs. 94 Bn and Net asset per share Rs 146 Bn. leases constituted 29% (2018/19 - 28%)
increased to Rs. 197 per share from Rs. of the total interest income and showed a
181. FINANCIAL SERVICES SECTOR decrease of 5% to Rs. 11.2 Bn. Interest
Financial services sector is the predominant income from loans was the biggest revenue
LOLC HOLDINGS PLC sector which contributes the major portion generator (51% form interest income) for
LOLC Holdings PLC the ultimate holding of the profitability as well as the asset the Company, at Rs. 19.5 Bn, however,
company of the Group carry out investment base of the Group. The total PBT of the showing a negative growth of 12%
activities in subsidiaries. The parent Segment reported of Rs. 25.7 Bn during compared to last financial year.
company sets strategic direction to the the year. The financial sector performed
companies within the Group. It also acts well, despite challenges of the business Income (Rs. Mn.)
as the central hub in supporting group environment resulting subdued macro- 25,000
companies providing various services. economic conditions. Furthermore, the

20,000
LOLC Holdings PLC have shown year-end recovery efforts were hampered
remarkable growth in terms of building its by the lockdown arising from theCOVID-19 15,000
asset base. Having originated as a leasing pandemic, resulting in financial sector

10,000
company in 1980 the company has evolved companies making higher provisions on a
as an investment holding company and conservative basis. 5,000
recorded total asset base of Rs. 146 Bn
recording a growth of 17%. The investment The LOLC’s Financial sector comprise of a 0
Leasing and Advances & Factoring Other
in subsidiary portfolio grew by 4% to Rs. diversified portfolio of investments starting Hire Purchase Other Loans Income Interest
with its main businesses in Srinagar Lanka Interest Interest Income
91 Bn depicting a strong investment base Income Income
which demonstrates the strength of its and covers Asia including Cambodia, 2020 2019
financial position. Myanmar, Indonesia, Philippines and

Pakistan. Among the financial companies
The Company engage in providing financial of the Group the top contributors to the
Total interest expense declined by 8%
assistance to the investee companies which performance were LOLC Finance PLC,
during the financial year. Majority of the
is reflected in the related party balances Commercial Leasing & Finance and LOLC
portfolio is funded through customer
amounting to Rs. 32 Bn. An income of Rs. Cambodia Limited in addition to the major
deposits with 69% of the interest expense
4 Bn was earned from these companies contribution made by PRASAC.
being attributed to customer deposits.
and recorded an increase of 37% during
The interest on conventional deposits
the year under review. The total borrowing LOLC FINANCE PLC
declined by 4% and the profit share cost
cost of the company increased to Rs. 10.7 As a leader in the Non-Banking Financial on alternative finance deposits declined by
Bn in line with the increase in borrowings Institution (NBFI) sector, LOLC Finance PLC 16% keeping in line with the decline in the
to facilitate the investment activities and (LOFC) concluded yet another successful deposit base. The interest on borrowings
the Group. The total borrowing base of the financial amidst many challenges and in showed a decrease of 14% compared to
company reached Rs. 96 Bn as a result of the operating environment. The financial the last financial year.
increased activities within the company. year under review posed challenges in
terms of the economic environment, with Other operating income increased by 20%
LOLC’s shared services operations offered
increasing pressure on credit quality. This reaching Rs. 4.8 Bn compared to Rs. 4
to its group companies, generated an
resulted in significant pressure on the Bn reported in the previous financial year.
income of Rs. 3.7 Bn. The overhead
profit margins. To arrest the situation, This was primarily because of the increase
attributed to the company remained
the management took steps to focus on in fair value of investment properties and
unchanged as there were no major
collections and improving credit quality investment securities.
expenses incurred on expanding the
rather than on portfolio growth. The
operations at parent company level. Total overheads of the Company decreased
Company strengthened its credit controls
by 4%, a result of adapting an efficient cost
25
LOLC HOLDINGS PLC
Financial Review Deposits (Rs. Mn.) Income (Rs. Mn.)

120,000 10,000
100,000 8,000
80,000
control mechanism over the financial year 6,000
60,000
and the Company was able to maintain
4,000
the overhead margin at same level as in 40,000
previous year. 2,000
20,000
Due to the slowdown of credit growth 0 0

2015 2016 2017 2018 2019 2020 Leasing and Advances & Factoring Other
during the year, lending portfolio stood Hire Purchase Other Loans Income Interest
Interest Interest Income
at Rs. 134 Bn at the year-end with a Income Income
2% decline. This was a result of the The Company managed the external 2020 2019
management decision to focus on shocks well and recorded Rs. 3.8 Bn profit
collections vs. new executions for all major after tax (PAT) for the financial year. As a
Fee income relating to the lending portfolio
lending products classes. result of the negative growth in PAT and
decreased marginally by 3% from Rs. 808
increase in equity in 2019/20, Return on
The major part of the portfolio constituted Mn to Rs. 786 Mn. Other income increased
Assets (ROA) and Return on Equity (ROE)
of loans, which includes revolving, term and due to fair valuation of quoted investments
reduced to 1.9% and 14.0% respectively,
mortgage loans. Leases were the second and fair value gain on investment in LOLC
as against 2.8% and 29.9% reported in the
largest product constituting 33% of the Myanmar Micro-Finance Company Limited.
previous year.
portfolio and factoring business showed a As a result, total other income shows a
decline to 2% of the portfolio. Credit card favourable variance of 32%.
COMMERCIAL LEASING &
portfolio is one of the high yielding products
FINANCE PLC Operating expenses of the Company
which was introduced 2 years back,
2019/2020 was a challenging year, decreased by Rs. 77 Mn, to Rs. 7 Bn. CLC
increased by Rs 738 Mn during the current
however, the Company has achieved a saw a significant increase in allowances for
period.
pre-tax profit of Rs. 2.0 Bn, a 2% drop from Bad & Doubtful Debts due to increasing
Rs. 2.04 Bn reported in the FY 2018/19. non-performing facilities. As at 31st
Lending Portfolio (Rs. Mn.)
The decline was due to lower net interest March, Company’s gross non- performing
100,000
income and higher impairment provisions loan ratio increased mainly due to lower
80,000
owing to the increase in non-performing collection in last two weeks of the financial
loans. The reversal of Deferred Tax year due to the Covid pandemic. However,
60000 increased post-tax profit by 29% to Rs. 1.5 the company managed to reduce the
Bn from Rs. 1.2 Bn. Direct expenses, Personal costs and Other
40,000
Operating expenses by Rs. 744.2 Mn which
Interest income of the Company decreased softened the negative impact.
20,000
by 9% from Rs. 14.1 Bn to Rs. 12.8 Bn,
0 with a marginal increase in the loan book Customer deposits reached Rs. 24.94 Bn
Leasing Loan & Factoring
Advances from Rs. 53.5 Bn to Rs. 54.1 Bn by 31 with a moderated 3% growth from Rs.
2020 2019
March 2020. The Company followed a 24.31 Bn amidst intense competition seen
more cautious approach in expanding its throughout the year. Customer deposits
LOFC customer deposits remained at a lending portfolio in view of the challenging accounted for 52% of the funding mix
strong level Rs. 99 Bn. CBSL continued economic conditions. compared to 48% in the previous year.
reduce the maximum deposit rate The funding base of the company further
Interest expense of the Company decreased from Rs. 26.46 Bn to Rs. 22.61
throughout the year. As a result, the deposit
accounted for 48.1% and 40.2% of the Bn due to capital repayments of foreign
base decreased by Rs. 16 Bn (14%
interest income and total income (including borrowing and settlement of short-term
decline). However, the Company retained
other income) respectively. Interest expense loans. The Company obtained some
the title of the largest deposit taking
decreased by 8% from Rs. 6.7 Bn to Rs. securitisation facilities during the year.
institution in the NBFI sector.
6.2 Bn with the decrease in borrowing base Foreign borrowings accounted for 18%
(including deposits) from Rs. 50. 7 Bn to of the total borrowing including customer
Rs. 47.5 Bn. deposits.
26
LOLC HOLDINGS PLC
The shareholder funds of the Company The Company’s cost to income ratio Myanmar, Indonesia, Pakistan, Philippines
reached Rs. 18.92 Bn from Rs. 17.46 Bn decreased to 66.2% for 2019/20 (, and has also expanded. Its micro finance
with the earnings from its operations and reflecting lower expenses which indicates business into the African region as well. It
increase in reserves. the efficient cost management efforts of is expected that the Group’s bottom will be
the Company and higher Total Operating continued to grow with these investments
LOLC DEVELOPMENT FINANCE PLC expenses decreased by Rs. 130 Mn (6%) reaching maturity and the reliance on
LOLC Development Finance recorded a during the year under review. Personnel domestic companies on generating revenue
profit after tax of Rs. 109 Mn for 2019/20 costs decreased by 12% and Depreciation will reduce overtime with contributions from
compared to the loss after tax of Rs. 153 charge increased by 69% in 2019/20 foreign investments.
Mn recorded in 2018/19 (171% year-on- financial year, due to the amortisation of
year increase). Despite the challenging right to use asset resulted from adoption INSURANCE SEGMENT
business environment, the Company of SLFRS 16. The Company revisited its Insurance segment of the Group is
managed to recover from the negative cost management strategies and managed represented by the Insurance business
performance recorded in the last financial to close down and merge 13 branches carried out by two fully owned insurance
year. Gross income reported a YoY growth reducing the number of business places companies within the Group, LOLC General
of 5.6% to Rs. 4.5 Bn. Sustainable portfolio from 76 to 63. As a result, other operating Insurance Ltd. and LOLC life Assurance
growth was a key focus during the year expenses reduced by 6%. Other expenses Ltd. including a representative office in
and achieved a Rs. 4.1 Bn growth (YoY reflected a similar trend linked to the Myanmar. The insurance segment was able
growth of 34.1%) in total gross portfolio. business growth. to maintain its growth momentum during
In addition, the Company succeeded in the year by recording strong growth owing
diversifying its loan portfolio by achieving Impairment charges on loans and
to prudent and focused business strategies
a major growth in leasing and asset back receivables significantly decreased by Rs.
followed with regular monitoring and
lending (Rs. 2.6 Bn). 312Mn (35%) during the year as a result of
evaluation.
increased recovery efforts such as setting
Interest income recorded Rs. 3.9 Bn, an up a call centre to enhance customer The Gross Written Premium from General
increase of Rs. 149 Mn (4%) compared to service, deployment of smart collect system Insurance increased by 14% to Rs. 4.1 Bn,
last financial year with improved business for collections to verify information and to whilst Life Insurance Gross Written Premium
volumes. The Company has achieved a drive customer loyalty. reached Rs. 2.6 Bn during the year. The
portfolio growth of Rs. 4.1 Bn during the Combined Gross Premiums crossed the
year. All the major segments contributed to FOREIGN INVESTMENTS IN FINANCIAL Rs. 6 Bn level during the year. While general
the growth. SERVICES insurance claims remained at Rs. 2 Bn
LOLC’s foreign investments in the region level the net claims in Life Assurance was
Net Interest Margin (NIM) decreased derived strong profit signature, a significant recorded at Rs. 569 Mn. LOLC General
from 18.0% to 16.2%. Year on year yield positive to the bottom-line results of the Insurance Ltd recorded Rs. 1,018 Mn as
structure of interest earning assets has Group. Led by PRASAC Micro Finance PBT while LOLC Life Assurance recorded a
been changed with the high volumes of Institution in Cambodia followed by profit of Rs. 312 Mn for the year ended.
asset back lending. Further, the Company LOLC Cambodia and LOLC Myanmar
had to rely on high cost interest bearing Micro Finance Company and the other TRADING SEGMENT
borrowings and related party borrowings investments too are expected to deliver The trading sector of the Group is mainly
to finance its growth in advances book, strong results in the medium term to long represented by Brown & Company,
due to the relatively small deposit operation term. providing a variety of trading services.
of the Company. Further, interest cost of
The company recorded an operational
lease liabilities resulting from the first-time LOLC Group expanded into the Asian
profit of Rs. 984 Bn during the year under
adoption of SLFRS 16 also included in the region with its maiden investment in
review. This outstanding performance in
interest expense. With this, the borrowing PRASAC and since then expanded into
the trading sector comes as a results of
cost increased by 18%. several other countries diversifying its micro
strategic initiatives implemented during
finance portfolio broadening the portfolio of
Credit related fees and commission income the year which has resulted in remainning
investments. The foreign investments in the
showed a significant increased of 36% due operational expenses at previous levels.
Asian region has recorded a commendable
to higher transactions volumes. Further, The maiden overseas trading operation of
growth over the recent past and made
collections from written off contracts the Group, Browns Machinery (Cambodia)
a significant contribution to the overall
increased by 86% with additional recovery PLC, too contributed positively to the
profitability of the Group As of now, the
efforts implemented. Group’s bottom line.
Group has investments in Cambodia,
27
LOLC HOLDINGS PLC
Despite above, the management remain

Financial Review optimistic regarding medium- and long-
term prospects of the sector, the strategic
investments made into cinnamon plantation
and components of them reaching
LEISURE SEGMENT harvesting stage gives new hopes to revive
The Leisure sector of the Group comprise the plantation segment of the Group.
of ‘The Eden Resort & Spa, Beruwala’,
Dickwella Resort & Spa, Dickwella’, The FUTURE OUTLOOK
Paradise Resort & Spa, Dambulla’ and ‘The The Group strategy to diversify into foreign
Calm Resort & Spa, Passikudah, and the markets has worked well as strong bottom-
latest addition to the leisure portfolio, The line results are expected to come in next
Sheraton Turtle Beach Resort Kosgoda financial year with the divestiture of its major
which was commissioned for commercial foreign asset. Owing to this success rate
business in the last quarter. The total asset of its overseas investments, the Group will
bases of the segment increased to continue to expand its footprint across
Rs. 67 Bn due to the ongoing construction in selected countries creating valuable
activities of the Group pertaining to the businesses in many regions. The financial
leisure sector. sector will play a key role in extending
LOLC’s global presence. the key focus will
Construction activities of the leisure remain in the financial services sector as the
properties in the Group includes main profit contributor to the Group. LOLC
Nasandhura apartment complex project at will continue to look out for new business
Maldives and Bodufhinalu in the South Ari opportunities in selected sectors for long
Atoll nearing completion and expected to term value creation to all stakeholders.
be opened in the comping year. .
During the year the loss related to leisure

sector increased by Rs. 786 Mn owing to
serious loss of business due to a drastic
drop in tourist arrivals post April 21st terror
attacks. The loss for the year for the period
under review recorded at Rs. 2.9 Bn.
The evolving challenges in the business
environment affecting the leisure business
due to COVID pandemic will be evaluated
in aligning the strategies to face the new
challenges.
PLANTATION SEGMENT
The Group’s plantation sector includes the
investments made in Maturata Plantations
Ltd. For the period under review, the
plantation segment recorded a loss of Rs
2.8 Bn. The loss is largely attributable to
the adverse weather conditions prevailed
within the country and low tea prices which
resulted from geopolitical conditions in
major buying markets. Apart from that,
the country’s political dynamics also had
a significant impact on wage escalation
for labours that caused an increase in
operational overheads.
28
LOLC HOLDINGS PLC
This performance was strongly supported by an experienced

management team, commensurate risk management systems
and a diverse funding profile from various sources including
foreign funding agencies, local banks and public deposits.
Financial Services
LOLC FINANCE PLC reaffirmed the Company’s issuer rating of the first nine months itself. An additional
LOLC Finance PLC cemented its leadership [SL]A with stable outlook and issue ratings Rs. 1 Bn growth was achieved by 20th
position in the non-banking finance market of [SL]A- with stable outlook for the Rs. March just at the time when lockdown
during the year ended 31st March 2020, 5,000 Mn Listed Subordinated Unsecured was imposed in Sri Lanka. As a result, the
reporting a net profit of Rs. 3.78 Bn Redeemable Debenture Programme Gold loans operations ended with the year
on a total asset base of Rs. 192 Bn as and the Rs. 3,500 Mn (Rs. 2,500 Mn under review with a portfolio of Rs. 5.8
compared to a net profit of Rs. 5.96 Bn issued) Listed Subordinated Unsecured Bn. This sterling performance reflects the
on a total asset base of Rs. 211 Bn in the Redeemable Debenture Programme of the company’s prowess and expertise in driving
previous financial year. This performance Company. the revamped Gold loans product in the
was strongly supported by an experienced market.
Earning accolades, LOLC Finance was
management team, commensurate risk
bestowed with the coveted titles, ‘Financial Speed Draft remains the main component
management systems and a diverse
Institution of the Year for Customer of lending to SMEs but during the year
funding profile from various sources
Convenience’ and ‘Overall Award for under review this product was revamped to
including foreign funding agencies, local
Excellence in Interbank Payments’ among better align with industry requirements and
banks and public deposits.
Non Banking Financial Institutions at to meet customer expectations. Fortunately,
During the period under review, the LankaPay Technnovation Awards 2019. agro-based SMEs were unaffected as after
business was re-engineered to improve three poor seasons, the sector achieved
customer service, improve efficiency Lending a bumper harvest in 2019/20 and cash in
and maximise returns while adopting The LOLC Group’s lending business hand as a result.
technology with a ‘digital first’ strategy. is primarily managed by its subsidiary,
LOLC Finance PLC. The challenging The focus during the year was on
Seven branches were relocated to extend
year impacted the company’s general maintaining quality, cleansing of the book
better convenience and customer service,
and alternate financing segment, as and managing Non Performing Loan
expanding its footprint in the Western
trading activity, which is the main line of (NPL) portfolios. NPLs rose by 13%
Province with the opening of one new
business amongst these customers, was but sanitisation of book helped and the
branch. The branch network that was
severely impacted. In addition, vehicle company shed bad credit which was giving
offering the Gold Loan Service was
imports in general declined and imports of negative results.
extended from 58 to 75 during the year
with a view to taking the product to a larger unregistered and/or brand new vehicles too
Taking forward our vision to infuse
customer base. kept dropping as per registrations recorded
technology into every aspect of company
by the Registrar of Motor Vehicles, which
operations, a process-driven financial
During the year under consideration, is a direct indicator of the negative impact
solution system with more automation
iPay recorded tremendous growth with on the leasing side of the business. The
and digital interface is being considered to
an unprecedented level of transactions company adopted a conservative lending
achieve minimal customer interaction. The
and volume growth in every aspect. The approach in view of the rising tensions in
impact of COVID-19 is expected to further
transaction volume grew by 681% with the the aftermath of the April attacks.
affect operations - with almost 140,000
registered merchant growth at 303% and a
The revamped Gold Loan operation was customers requesting for moratoriums until
user registration growth of 241%.
able to achieve the ambitious target of September 2020, which could be extended
Further, ICRA Lanka Limited, a Group Rs. 2 Bn by 31st March 2020, within further if economic rebound is not seen.
Company of Moody’s Investors Service has The adverse impact on profitability would
29
LOLC HOLDINGS PLC
standard of living and future prospects. 193% while the portfolio recorded a 195%
Financial Services As the premier finance company in the growth despite macro-economic challenges
microfinance segment, LOLC Finance offers caused due to the April 2019 attacks.
two main product lines, namely, micro Steps are already being taken to introduce
leases against assets and micro loans more payments and collection channels to
be immense for the sector, but as the (including micro group loans) and housing make infuse convenience for cardholders.
largest financial institution in the country, loans and business loans for individuals. LOLC plans to introduce co-branded credit
LOLC Finance aims to safeguard depositor cards by partnering group companies and
The rise of Non-Performing Loans (NPLs) other reputed entities. Empowered with
wealth and loans receivables.
in the industry influenced the company’s the payment card acquiring license now
risk appetite as it cut back lending to in our armoury, the company is geared to
Deposits
the segment. Despite many setbacks in create a digitally enhanced payment eco-
As the largest finance company in the the segment, the company’s focus on system, facilitating financial inclusion to the
country, LOLC Finance enjoys best-in-class supporting the rural economy and the
ratings and a solid brand reputation which bottom layer of the pyramid while gaining
micro entrepreneurs renders it the highest
ensured customer retention was sustained a reputation as a true disruptor in the
financier of the three-wheelers for the
at high levels. Expanding the deposit base traditional credit card business.
year, financing 34,965 three-wheelers and
through fixed deposits and savings was extending loans to over 2,500 customers Currently LOLC Finance issues 4 main
prioritised during the year under review. for rural housing. The company also card types, namely Pulse, Gold, Platinum
Although the entire industry experienced a accelerated asset-backed lending in and World. Within these, there are sub-
reduction in new deposits, LOLC Finance 2018/19 with a portfolio of Rs. 29 Bn which categories based on existing client types,
maintained its deposit book and focus to grew to Rs. 30 Bn in 2019/20. professions and other identified customer
sustain granular deposit customers from the
segments to best suit requirements. These
bottom of the pyramid. As a reputed and As a result of the spill-over effects of the
verticals allow us to closely monitor the
responsible finance company, necessary debt relief programme, the company’s
performance and behavioural factors
action was taken to service clients during initial micro loan portfolio of Rs. 29 Bn
for future product developments and
the lockdown period - servicing them not has dipped to Rs. 28 Bn in the year under
differentiations.
only to withdraw their funds at necessary review and caused deterioration in the asset
times but also facilitating them to invest quality of the entire microfinance sector. In LOLC Credit Cards come with an added
with us. order to maintain low NPLs, LOLC Finance Cardholder Protector Insurance Policy as
established a dedicated micro recoveries an optional benefit with a nominal annual
A new product was launched during team for asset-backed and non-asset premium, which secures the cardholder
the year under review - LOLC Real-time backed loans during the year under review. liability in case of demise or permanent
Corporate Online, a business solution for
disability due to accident/illness, thus
all corporates for hassle-free payments. LOLC Finance enjoys a strong presence
allowing the cardholder to use the card
Despite the challenges, LOLC Finance in financing of agricultural implements
freely without being apprehensive on any
continued to service its customers with and aims to further carve out a greater
burden to his/her family or dependants.
the savings cash collections facility where share in this segment in line with the
The LOLC MasterCard is embedded with
appointed field collection agents visit government’s renewed thrust on prioritising
an EMV Chip, ensuring the cardholder of
the customer’s doorstep to collect cash, the agricultural sector.
maximum data security and safeguarding
thereby providing the customer with the
LOLC Finance has plans to set up a centre financial interest. The card is NFC enabled,
ultimate convenience of depositing cash
of excellence for Microfinance which will assuring convenience and ease to the
into their savings account without having
offer training programmes and a platform cardholder when transacting.
to visit the branch. A number of internal
process improvements were also made for trade fairs, competitions and networking
Whilst initiatives were taken to increase
simultaneously in order to enhance overall for its micro customers, while providing a
issuance, efforts were made to improve
efficiency and service delivery for all link to external e-commerce platforms to
showcase products and services. customer satisfaction through regular
customers.
training of Call Centre staff and via periodic
Credit Cards quality assurance/monitoring as the Call
Microfinance
Centre plays a key role in the card business
LOLC Finance’s dominant presence in During the period under review, the credit
for both existing and potential customers.
the Microfinance sector is attributable to card portfolio surpassed Rupees One Billion
Understanding the needs and wants of
its vision of enhancing income levels of within a short period of a year-and-a-half
various customer segments, new card
its micro customers to help improve their with card issuance growing by as much as
30
LOLC HOLDINGS PLC
products were introduced during the year. emphasis is placed on locating branches funds was reduced by 8% and overheads
Furthermore, special offers and promotions in key towns and cities across Sri Lanka by 12%.
were organised with regional-level merchant with a high population density and a higher
partnerships to offer maximum financial proportion of SMEs. CLC’s equity stands at Rs. 17 Bn in Tier
benefits to the cardholder to drive customer 1 capital, a quantum which is way over
loyalty. During the year under review, one new the Central Bank’s capital adequacy
LOLC Finance branch was opened requirements for companies of its nature,
Recoveries in Moratuwa, while Wennappuwa, making CLC one of the highest capitalised
The Recoveries unit continued to work Keselwatta and Kotahena LOLC Finance financial institutions in the country.
tirelessly on improving recoveries. The new service centers were upgraded to fully-
fledged branches. Also during the year, Non-Performing Loans (NPLs) for the year
call centres were upgraded to fully-fledged
Akkaraipattu and Kochchikade’s service also was a success: It stood at 7.05%,
status during the year so as to support
centres were discontinued while operating which is way lower than NPLs of the
the recoveries’ effort. Staff underwent
the main branches in the said locations. industry at 11.56%.
regular training to enhance their customer
relationship skills while teams were Our main goal is to ensure that each LOLC
Substantial investments have been
also strengthened in the interim. Post- Finance branch maintains the widest
channeled to digital platforms to bring
COVID-19, the government has asked possible geographical outreach in order to
financial services to customers’ fingertips
finance companies to grant moratoriums serve the needs of the people in the area.
while being observant of cyber security
to SME and Microfinance customers, concerns. Digital solutions have positioned
COMMERCIAL LEASING &
which will adversely impact the company’s CLC to respond quickly to customer needs
FINANCE PLC (CLC)
profitability in 2020/21 coupled with the fact during the COVID lockdown. One of the
that many sectors which our customers CLC ended FY 2019/20 on an impressive
key initiatives in this arena in the year
are engaged are adversely impacted by note, delivering a consistent Year-on-Year
under review was CLC’s collaboration with
COVID-19. (YoY) performance despite the extremely
mCash for customers to pay via the mobile
challenging events that marked the period.
money platform with ease. With approval
Call Centre from Central Bank, CLC plans to mobilise
During the challenging year, the company
A dedicated 24X7 Customer Care unit was savings deposits too through mCash in the
performed well in comparison to its
established to respond to customer queries future.
competitors, and also prioritised digital
and to educate customers on how to use
platform expansion, enhanced its portfolio,
credit wisely whilst enjoying the benefits The overall performance of the Islamic
asset quality, products and funding
to the fullest. As part of our initiative of Finance Unit of CLC was also satisfactory
bases, leveraged digital and social media
embracing virtual banking, we introduced especially considering the challenging
communications both externally and
the digital payment mobile app ‘iPay’ to macro environment. The company
internally, while improving employee
our customers, enabled online banking for experienced a rise in customer deposits
engagement considerably.
customers and extended the services of which truly reflects the public perception of
the Customer Call Centre to offer 24-hour CLC concluded the financial year with a the company as a reliable and trustworthy
assistance to them. During the height of the portfolio of Rs. 54 Bn, increasing YoY by financial services partner. CLC was
COVID -19 pandemic, when the branches one billion from previous year’s Rs. 53 Bn. reaffirmed as SL (A) stable by ICRA Lanka
had to remain closed due to social Considering the high NPL ratio prevalent Limited, which guarantees trust, security
distancing restrictions, the Central Contact in the industry, CLC’s portfolio growth is and stability for its customers.
Centre functioned throughout and it was an achievement of note. CLC’s sustained
CLC, over the years, has introduced a
business as usual as its team of agents was performance in the face of challenging
large number of product lines and services
able to work from home 24x7 and provide a times such as the April 2019 Easter Sunday
to cater to the demands of its varied and
seamless service. attacks was powered by its quality portfolio,
granular customer base that consists of
95% of which consists of Asset Backed
large scale companies as well as SMEs and
Branch Network Products that serve to absorb any market
micro enterprises. Due to the company’s
LOLC Finance offers an island-wide shocks.
commitment to provide products and
network of 139 points which serve as
CLC recorded Profit After Tax (PAT) of Rs. services to customers that are relevant,
primary customer touch points serving
1,547 Mn, recording an increase of 29% affordable and convenient, CLC has
thousands of customers, which requires
from 1,198 Mn in the previous year though continuously been winning in many brand
the branches to be strategically located
revenue declined –but marginally. Cost of rankings. ‘Commercial Leasing’ was placed
to serve the surrounding region. Strong
among the top 50 Most Valuable Consumer
31
LOLC HOLDINGS PLC
under review, the company converted the entrepreneurial dreams. The dynamics in
Financial Services PBT loss of Rs. 140 Mn in 2018/19 to the market are changing and lending is
Rs. 176 Mn PBT profit. becoming more individualistic, a trend the
company is monitoring closely and catering
LODF’s strong balance sheet was further to as well.
affirmed by ICRA Lanka, improving its
Brands in Brands Annual 2020, compiled
ratings to A- stable. ICRA took note of the Although the company was not impacted
by Brand Finance and published by Media
currently adequate capital structure and adversely due to COVID-19 since it was
Services. In the 2020 edition of Most
asset liability maturity profile of the company late March by the time the lockdown
Respected Entities, CLC features at No. 54.
as LODF reported a regulatory Tier I ratio was issued, LODF was obliged to make
This is rank was performed by the global
and Capital Adequacy Ratio of 12.5% and an additional provisioning for adverse
measurement and data analytics company
13.5% in September 2019 as compared economic factors in the future due to the
Nielsen (on behalf of Media Services).
to the regulatory requirement of 6.5% and pandemic. Despite this, LODF arrived
In a year that produced unprecedented 10.5%. Against the background of the at Rs. 176 Mn PBT after accounting for
nation-wide and sector-wide shocks, CLC’s global pandemic and its repercussions on provisioning. In the preceding year, the
agility and adaptability -backed by its skilled the economy and weak business activity, provision of Rs. 896 Mn came down to Rs.
leadership and human resources which when rating agencies are conservative 584 Mn during the year under review.
propelled the firm untiringly forward- has about upgrading standings of companies,
this is indeed a reiteration of LODF’s strong LODF is now pleased to offer an ATM cum
become key drivers in its sustainability
growth trajectory and robust fundamentals. Debit Card to customers via the Lanka
and growth. Supported by CLCs robust
Clear platform which is an improvement on
financial, compliance, legal, operational
The Easter Sunday attacks in April 2019 the ATM card we were aiming to launch last
and digital infrastructures, CLC is poised
unfortunately stymied further growth in year. Considering the islandwide network
to scale the Sri Lankan financial sector
profitability that could have been achieved. of LankaClear ATMS customers will enjoy
landscape and in rankings in an equally
Nevertheless the financial performance in the convenience of a dual function card for
(if not more) fitting manner in the years to
2019/20 was achieved through a realigned conducting all transactions with ease and
come.
focus on collection and recoveries; reducing convenience.
portfolio by Rs. 1.8 Bn in 2018/19 and
LOLC DEVELOPMENT FINANCE PLC The call centre launched last year has now
postponing new branch openings. In the
Despite experiencing volatile conditions in year under review, the contribution of evolved into a fully-fledged automated
the Microfinance sector during the 2018/19 leasing rose by 27% as opposed to 15% system and is serving as an ideal conduit
financial year, LOLC Development Finance in the previous year. A concerted effort to to build customer relationships, resolve
was able to surmount prevailing challenges diversify the portfolio was made so as not customer complaints and to follow up on
to deliver improved profitability in the year to have an over reliance on microfinance recoveries.
under review, which reflects the financial alone. Going forward, contribution of
prudence and expertise that underscores Training has been one of the key pillars for
leasing will be increased to about 35-40%
its operations. improved profitability. Infusing convenience
of the total portfolio.
for customers and expanding reach further,
During the year under consideration, the After closing down 11 branches which LODF entered into an agreement with
company increased its lending portfolio were proving non-profitable in the previous Mobitel to collect customer rentals through
by 34% from Rs. 12.1 Bn in 2018/19 to year, the company is now operating with islandwide mCash dealers, which is one of
reach Rs. 16.2 Bn. In the previous year, 66 branches across the island. During the key technology-backed initiatives in the
the company had consciously reduced its the year under consideration, we made a year under review.
lending portfolio in response to the industry focused effort to shift our business more
trend of rising Non-Performing Loans in Moreover, during the period under review,
towards individual lending thereby reducing
the microfinance sector as a result of a LODF successfully fine-tuned systems and
emphasis on group lending models.
debt relief scheme announced by the processes, increased its leasing portfolio by
Having made this paradigm shift before
government. Realising the unfeasibility of introducing new products and shifted away
the pandemic struck has benefitted the
the scheme in the long term, Microfinance from micro leasing. The company is also
company as social distancing rues makes it
customers of LODF reverted to repayments infusing value addition by aiming to partner
difficult to gather groups of women together
terms agreed upon with the company. As a key agri input providers for encouraging
for the group lending schemes. We believe
result, it was able to reverse the decline in home gardens and indigenous farming and
more big ticket individual lending products
profitability experienced in 2018. In the year focusing on more high value commercial
will help female borrowers realise their
vehicles to diversify its portfolio.
32
LOLC HOLDINGS PLC
The company has already developed micro optimistic economic environment, following institutional, high Networth and retail
housing, individual loans and property the positive sentiment due to strong political investors to snap up stocks at low prices
mortgage loans products. During the year leadership. The second half of the year with attractive earning multiples. LOLC
under review, LODF introduced high value under review showed improvement partially Securities will continue to leverage on
loans of up to Rs. 800,000 with property due to a strong marketing drive which was Group synergies to create value and forge
mortgages for individual customers, offering aimed at educating investors and attracting foreign collaborations to seize further
more flexibility on amounts and repayments. new clients. Against a challenging socio- opportunities in the nation’s capital market.
economic front, it is noteworthy that the
Continuing its journey of enhancing services company increased its market share to be LOLC CAPITAL ONE LIMITED
during 2019/20, LODF established a positioned sixth overall in terms of market LOLC Capital One (LOCAP) is a Group
Product Development Committee to drive turnover. subsidiary and as a boutique investment
innovation and new products that cater bank it provides advisory services for
to emerging needs of its customer base LOLC Securities’ research team continued Mergers and Acquisitions (M&A), Debt
whilst also leading the market. The aim to be a yardstick in the industry, providing Capital Markets (DCM), Equity Capital
is to customise products for its base of independent and informative research. Markets (ECM) and alternative investments.
150,000 customers according to their The Company’s research material LOCAP navigated yet another challenging
specific needs, for which the company is attracted overwhelming demand due to year, supported by its strong and loyal
in the process of conducting customer its comprehensive insights into economic, clientele and the strong backing from its
segmentation. Going ahead, LODF will industry and equity matters. ultimate parent company, LOLC Holdings
leverage on joint synergies with LOLC PLC. The year under review presented
Group to explore unique offerings to fulfil LOLC Securities also continued with the
much volatility for CSE activities, including
aspirations of its customer base. customary overseas investment promotion
prolonged impacts of political instability,
drive, conducting Road Shows in Hong
April attacks and global COVID-19 fears
LOLC SECURITIES (PVT) LTD Kong, Japan and Singapore to promote Sri
witnessed in the latter part of 2019 and first
LOLC Securities (Pvt) Ltd, is a trading Lanka as a lucrative destination for Capital
quarter of 2020.
member of the Colombo Stock Exchange Market Investments. During the year under
(CSE) with a strong retail, institutional and review, the company strengthened rapport The Central Bank of Sri Lanka’s prudential
foreign client base. LOLC Securities, the with a leading Japanese broking giant, an macroeconomic policy initiatives to boost
Group’s stock broking arm, delivered a American boutique investment bank and subdued business activities due to the
lacklustre performance during the first half several other foreign private equity funds. pandemic has signalled that the country’s
of the year due to the adverse effects of the economy is moving in the right direction.
In 2020/21, we expect the Central Bank of
Easter Sunday attack in April followed by With its lean business model, the company
Sri Lanka to implement an expansionary will continue to focus on widening its
the political crisis that engulfed the country.
monitory policy coupled with the prospect reach in investment banking by leveraging
In the last quarter of the financial year under
of political stability and historically low on the strengths of the LOLC Group
consideration, ASPI and S&P20 lost 25%
market multiples which could bring and by collaborating with other leading
and 33% of their value respectively largely
back investor confidence. Moreover, a local and foreign counterparties. We are
due to global COVID-19 pandemic fears
prevailing low interest regime will certainly optimistic about the post-election scenario
resulting in the flight of foreign capital out
create renewed interest in asset classes with improved investor confidence likely
of the country. Further, CSE was closed for
such as equities in the coming months. to generate opportunities which would
about two months due to the government
These factors will influence increase in certainly benefit LOLC Capital One.
enforced curfew covering the entire country
listed securities in CSE. However, the
to prevent the spread of COVID-19. It must
market outlook would also depend on the LOLC AL-FALAAH – ALTERNATE
be stressed that 2019 was the year with
government’s ability to contain COVID-19 FINANCIAL SERVICES
the lowest GDP growth since 2001. These
successfully and avoid a second wave
adverse spill-over effects were felt across LOLC Al-Falaah remains at the forefront of
which could result in a broad-based panic
the economy, further dampening business the Alternate Financial Services industry
selloff, putting capital market participants in the country. It has successfully grown
confidence, with the CSE recording Net
under severe pressure. Further, the its stakeholder base while diversifying its
Foreign Outflow of Rs. 10.84 Bn during the
sentiment among foreign investors has portfolio to include customers from all
year.
been gloomy due to the pandemic, the walks of life and from all communities.
Nevertheless, the company achieved slow performance of listed companies Its innovative and customised product
a more robust performance during the and economic upheaval in the US, Europe portfolio addresses both business and
second half of the year, supported by the and China. However, we anticipate local socio-economic requirements of diverse
33
LOLC HOLDINGS PLC
of investments which reiterates the trust As the year progressed, business recovery
Financial Services that the investors and community place in was swift for LOLC Al-Falaah, because
the company. It is evident that LOLC Al- in an uncertain economic environment,
Falaah’s deposit portfolio grew significantly alternate financing offered by the company
during the year under review from Rs. 7.9 proved to be a more viable and safer
market segments, whilst meeting the billion to Rs. 11.1 billion, a 41% growth in option. Over the years, LOLC Al-Falaah has
specialised needs of individuals. Its comparison with 2018/19 with Rs. 875 Mn invested substantial resources to educate
portfolio offers products such as profit profits being paid to depositors, reflecting a people on its alternate financing products
sharing investment & savings accounts, significant growth despite a high pressure and services, which are not relegated
leasing, trade financing, import financing, banking and finance environment. As a to any one community and in fact are a
property & project financing and working result, the company managed to sustain sustainable choice for people who want
capital financing solutions under alternate a favourable balance of deposit portfolio true financial security.
concepts to conventional modes of finance. vs asset portfolio through the year under
Customers can conveniently access these review. LOLC Al-Falaah’s deliberations in the
products and services via dedicated alternate financial services sphere have not
windows within LOLC Finance’s extensive In terms of the Assets book, there was only delivered quantifiable results, but also
network of over 100 branches and service a growth from Rs. 9.6 billion to Rs. 11.8 qualitative outcomes by winning the trust of
centres island-wide, including dedicated billion, a growth of 22% in comparison to the community at large, which is reflected in
Al-Falaah centres across the country. last financial year. All in all, on assessing the winning the ‘Best Islamic Bank in Sri Lanka’
turmoil in the industry during the year under and also the ‘Best Leasing Company
Although LOLC Al-Falaah was gearing review, the Company managed to come out Globally’ by IFN’s Best Banks polls 2019
up for strategic growth and expansion strongly, recording a significant profit. for the third consecutive year. Moreover, for
in 2019/20, the unfortunate events that the 13th consecutive year, the company
ensued during the period under review On another positive note, with Non- held an annual compliance audit of the
disrupted normal business activity. A large Performing Loans (NPLs) expected to rise financial services unit which was concluded
proportion of the company’s customer against this weak economic backdrop, the successfully.
base is engaged in trading and tourism Company accelerated its recovery effort to
related businesses, two sectors which felt conclude the year with relatively low NPLs Looking Ahead
the spill-over of the tragic incidents in April in comparison to the industry, restricting its
The Company has brought about
2019, the presidential election later on in NPL ratio to 4.72%, which is far below the
technological improvements during the
2019, and the outbreak of COVID-19 at the rest of the financial services industry and
year under review such as compliance
tail end of the financial year. However, its even banks.
monitoring reports, customer
customers who were engaged in agriculture communication tools, communication and
Profitability witnessed a slight dip, from
related and export-oriented businesses automation of savings statements and so
Rs. 452 million to Rs. 331 million. Although
remained relatively unaffected, lending on. It is also in the process of introducing
there is a value-wise drop in profitability,
balance to the company’s asset book. The an e-platform for cost-effective and real-
some of the main causes were lower policy
prudent credit guidelines adhered to by the time notifications as well as e-learning for
rates, significant deposit base growth
company as a whole and also Al-Falaah’s staff. LOLC Al-Falaah’s website was also
during the year and prudent investment
alternate financial services model and revamped during the year with a more user-
in overheads, especially in the areas of
the nature of its products by principle are friendly outlook for customers to quickly
infusing technology, digitisation, training and
structured to absorb any downturn. access product and service information.
also expanding the recoveries effort.
The website has been updated in
LOLC Al-Falaah’s strong credentials as compliance with Central Bank of Sri Lanka’s
In line with LOLC Al-Falaah’s corporate
a reliable and a compliant entity with the new guidelines.
social responsibility commitment, its
backing of the LOLC Group gave the
alternate financing business model ensures
depositors extra comfort during times Although the future of alternate financing
it reaches out to the community, offering
of crises and aptly no major outflow of and specifically LOLC Al-Falaah’s products
reliable access to funds whilst also fulfilling
deposits was seen as is usually the case in and services hold much promise, the
its portfolio cleansing responsibility. During
times of economic or political volatility, when outbreak of the COVID-19 pandemic and
2019/20, the company allocated over
depositors tend to withdraw savings and resulting lockdown has impacted the
Rs. 22 Mn for new and on-going charity
deposits. In fact, almost immediately after economy adversely. Nevertheless, the
projects which encompass medical care,
the tragic events of April 2019, the month Company will continue to strive to build on
education and social upliftment.
of May onwards witnessed a positive inflow
34
LOLC HOLDINGS PLC
its successful performance in 2019/20 to Broker Unit, Bancassurance and strategic continues to focus on quality and consistent
launch the Gold-Storage facility which is partnerships as well as through LOLC’s delivery in the agency channel and aiming
also an indirect alternative for the popular branch network. Three new branches in to further grow the bancassurance channel
Gold Loans and pawning offerings in Chilaw, Medawachchiya and Anuradhapura by investing in strategic partnerships
the market. This product was developed were inaugurated by LOLC Life Assurance, because of the deeper penetration of
keeping in mind the urgent needs of the while LOLC General Insurance opened the bank branch network in the country.
lower income micro segment. LOLC a new branch in Kurunegala, expanding Significance of customer relationships
Al-Falaah remains ahead of the curve in geographical reach. to LOLC Life is evidenced by its wide
terms of market leadership, innovation and geographic presence consisting of 140
compliance. LOLC General and LOLC Life recorded LOLC Finance branches, 1,200 Agency
growth above the industry growth rates force and 150 bancassurance officers.
LOLC LIFE ASSURANCE LIMITED during the year under review. Despite
(LOLC LIFE) AND LOLC GENERAL being established a mere nine years ago, LOLC Life Assurance drives a performance-
INSURANCE LIMITED (LOLC the two entities have maintained a steady based culture and invests in its people
GENERAL) growth momentum as a result of prudent to ensure their career development.
and focused business strategies which are Recruiting Agents with the required skills is
Industry Performance
regularly evaluated and strengthened. critical, especially in the agency channel.
During the financial year under review, A special Training Department has been
Sri Lanka’s Insurance industry reported a GWP from General Insurance increased by established for Insurance staff, which
total Gross Written Premium (GWP) of Rs. 17% and surpassed Rs. 5.3 Bn, whilst Life conducts continuous training for marketing
189,577 Mn compared to Rs. 175,911 Mn Insurance GWP reached Rs. 2.7 Bn during and underwriting to educate staff about the
reported in 2018. The industry grew at a the year. The combined GWP reached the technical aspects of the business which
moderate pace of 7.77% in nominal terms Rs. 8 Bn mark, a considerable performance empowers them to service customers
in 2019 compared to 10.03% recorded achieved by a mid-sized Insurance better and identify valuable new business
in 2018. Motor Insurance remained the company in a relatively short span of for the Company, while giving specialised
major contributor to GWP in the General time. Increase in operational activities also training for top advisors to enable them to
Insurance sector, although the industry resulted in an increase in general claims sell more using different platforms.
grew at a slow pace of 5.47% compared expenses by Rs. 54 Mn over the previous
to the 7.87% growth reported in 2018. The year, whilst net claims in Life Assurance In addition, the company ensures
Life Insurance industry managed to record increased over the previous year by Rs. focused training for low performing
a premium income of Rs. 88,709 Mn in 110 Mn. The increase in business required advisors to improve quality, productivity
2019 with a 10.51% growth reported in additional reserves for Life businesses. and persistency; MDRT achievers and
2019. Hence, funds reached approximately Rs. high performing Advisors to enhance
3.6 Bn and Rs. 4.0 Bn in General and Life their decision-making capabilities; and
Performance of Life and General businesses respectively. conducting focused training programs
Insurance business on Mission MDRT and annual award
As fully-owned subsidiaries of the LOLC LOLC Life Assurance Limited achievements.
Group, LOLC Life Assurance and LOLC LOLC Life Assurance has adopted a unique
General Insurance avail joint group service delivery model across Personal The company always motivates the
synergies such as brand strength, loyal Line Channel, Bancassurance and Broker staff in different ways to gain marketing
customer base and island-wide distribution and Partnerships. The Company’s value industry recognition and delivering superior
reach. In addition, prudent underwriting, proposition offers Pure Life Protection, living customer service. LOLC Life strives to
focused claims management, sound benefits, Hospital cash, Investment, Child deliver high quality service to existing as
investment policies and astute marketing Protection and policies offering a number well as new customers. From the inception
strategies have further led to the strong of Critical Illness covers in the healthcare of a policy right to the maturity or claim, it
performance of both entities in the face sector, retirement solutions, Mortgage delivers the best service because it believes
of challenging market conditions over the Insurance Plans and Group Insurance that customers look for a partnership with
years. Plans. an Insurance company which provides
them convenience and transparency and
Both Life and General Insurance businesses The LOLC Group subsidiaries, agents, greater value in every engagement. LOLC
achieved impressive growth during the banks, brokers and other tie-ups are Life Assurance customers can access
year, supported by regional expansion key capital input providers and work the call centre to make claim inquiries,
through Direct and Personal line channels, as distribution channels. The company product inquiries or provide feedback. This
35
LOLC HOLDINGS PLC
of all channels - since these collectively life balance, a recreational evening was
Financial Services make up its engine of growth. held for staff of both companies to enjoy
themselves and network.
LOLC General Insurance Limited
Although external operating conditions Customers remain a top priority at LOLC
personalised interaction helps develop real remained challenging through the year General Insurance and can always access
and enduring relationships with customers. under review, the General Insurance its 24x7 call centre at their convenience.
Multiple payment channels are available, business performed steadily despite the Delivering claim settlements speedily
keeping customer’s convenience in mind, weak economic climate. LOLC General coupled with the facilities of a repairing
by partnering with multiple service providers Insurance is forging towards its goal of centre within the LOLC Group offers
to provide a wide array of payment achieving a turnover of Rs. 6 Bn by the year greater convenience to customers. Multiple
channels to customers such as ipay/ 2021. The company was the first to achieve payment channels are designed keeping
mCash/Easy cash/Online Payments and the first two billion rupee landmark within customer’s convenience in mind.
credit cards. 3 years - the fastest compared to even the
By locating branches strategically,
larger players who took almost a decade to
Going ahead, the Company’s priority will the company is enhancing customer
reach the same `turnover.
be developing innovative products, strong convenience and its focus on
brand building and strategic agency branch In light of the bleak economic outlook in the accomplishing full automation remains
expansion into new regions. The company year under review, LOLC General Insurance strong – with the entire process automated
has started the ‘Online Banca Day’ concept developed products and services sensitive end-to-end, from meeting the customer to
where we sell policies through Zoom, Skype to short term returns with guaranteed the point of delivery while policy servicing
and Whatsapp groups. investment returns higher than the market is achieved via technology platforms.
to lure customers with high net worth or Anticipating greater need for virtual selling
LOLC Life Assurance is driving the Mobile excess cash. Apart from leveraging on against the outbreak of COVID-19 in the
App-based payment channel to leverage Group synergies, the company invests last month of the financial year under
mobile phone penetration in Sri Lanka. heavily on building brand awareness across review, the Insurance arm is directing
Further steps have been taken to increase various media platforms and sponsoring greater energies towards this.
standing order payments. A product popular racing events such as the Foxhill
development team was set up of members LOLC FLEET MANAGEMENT
Supercross, Gunners Supercross, Gajaba
from different functional areas of the Supercross, Rotherham Katukurunda The year under review proved challenging
business such as Actuarial, Life operations, Race, Walawa Supercross and Colombo for LOLC Fleet Management which primarily
IT, Finance and Marketing to generate new Supercross in the past. services corporate clients and noteworthy
ideas on product development. This team SME and high net worth individuals.
will lead the product development initiatives LOLC General Insurance operates across Prevailing high interest rates coupled with
of the company to meet health, retirement, Direct Channel, Bancassurance and the fallout of the April 2020 attacks and
investment and saving needs of the Broker channels. In terms of Gross Written the November elections all contributed
customers. During the year under review, Premium (GWP), the company sustained to weaken growth. The market remained
the company introduced Fund Builder plan the 7th position amongst the top 10 largely stagnant as many corporates opted
to enhance value proposition to customers. players. On the bancassurance side, the to hold on to their budgets for a better
company recorded robust growth while outlook after the elections. Unfortunately,
LOLC Life Assurance has planned to a slew of business promotions were held just as the market was looking up
move into digital platform considering the through the year for customers of partner thereafter, the outbreak of the COVID-19
current innovations and initiatives in the banks. pandemic further dampened prospects for
IT sector. By Q1 2021, fully automated recovery by end of the financial year under
Insurance system platform with a paperless The performance-based culture at consideration. Corporates will remain wary
operational environment has been planned. LOLC General Insurance continues of spending on their fleets until such time
The company also aims to leverage with substantial budgetary allocation that there is economic stability.
distribution capabilities, operational for training and development purposes.
excellence and strong brand presence Greater investment is being directed In operation for 20 years, the fleet
to capitalise on the attractive market towards e-learning programmes so that management business unit of the
opportunity in the Life Insurance industry, staff can engage in learning at their own LOLC Group is equipped with a fleet of
with a focus on consistent service delivery convenience. Promoting an optimal work- approximately 600 vehicles given out
36
LOLC HOLDINGS PLC
for daily hires. The business unit derives

a steady income from clients who have
already signed long term contracts.
LOLC Fleet Management is exploring
a new business line in keeping with the
hiring background. Going ahead, the unit
proposes focusing on clients with strong
repayment capabilities.
LOLC MOTORS
LOLC Motors, a subsidiary of LOLC
Holdings, was well-poised to expand its
footprint and improve profitability at the
start of FY2019/20, However the sequence
of external events during the year resulted
in unfavourable operation conditions.
Going ahead, economic resurgence and
restoration of normal economic activities
will generate revenues for the company and
increase demand for its services.
LOLC Motors is a workshop for automobile

maintenance, servicing and repairs for a
range of vehicles, mainly dedicated to body
shop or accident services. Insurance repair
is one of the significant contributors to the
product line. The workshop attends to
the fleet management section and internal
company vehicles. While mainly catering
to group company vehicles, the company
has successfully expanded its customer
portfolio to include a small percentage
of clients outside the group as well. The
advantage that LOLC Motors offers is that
it can service all brands of vehicles while
its turnaround time is faster. Located at
IDH, the workshop is manned by 50 skilled
workers with extensive mechanical and
technical expertise.
The company has been a reliable employee

generator for a percentage of Germantech
trained technicians who are further trained
in-house. Key technical staff members are
sent abroad for training. While the company
recorded significant improvement, it is
yet to achieve anticipated growth due to
adverse market conditions. On the whole,
the company has its future growth trajectory
well mapped out to take the company to its
desired profitability levels.
37
LOLC HOLDINGS PLC
The outlook for Browns agriculture remains positive, given

the sector’s widening product portfolio, expanding regional
presence and innovation-led growth strategy. The sector will
continue to add value to agricultural communities across the
island through widening its farmer networks and investing in
Agriculture & Plantation farmer development and capacity building.
THE BROWNS AGRICULTURE DIVISION sub division. It was a good year for the crop warehousing facilities, which provide
The Browns agriculture division is the solutions sub division as we registered 12 warehousing services, and also owns a land
market leader for all agricultural machinery products under registrar of Pesticides and bank of approximately 1,540 perches in
requirements in Sri Lankan farmer developed relationships with suppliers such Ekala. AgStar PLC has subsidiaries in the
communities. The division recorded its as Zagro - Singapore, Nufarm – Malaysia Fertiliser, Cropcare, Properties, Exports and
highest ever turnover during the year and many more. In the seeds sub division, Seeds sectors.
under review. Underpinned by our strong as an initiation of the business we registered
brands and innovative product range with 16 F1 Hybrids (including 11 F1 Vegetables, The fertiliser business has always been a
an unmatched service levels, the division three Fodder hybrids, One F1 Maize hybrid challenging one as it is a highly regulated
managed to cater to all the requirements and one F1 Water Melon variety.) industry and historically subject to ad hoc
in the farming demographic. Introduction policy-making. Despite these constraints,
of the most sophisticated and expensive Further to this developed good business the segment performed reasonably well
tractor model in the Sri Lankan agriculture relationships with suppliers such as Chia during the year under review. Greater
industry was a key milestone for the year. Tai Seeds - Thailand, Phu Nong Seeds – government subsidies coupled with
The division was able to continue the market Vietnam, Emerald Seeds – USA and many restriction of imports impacted the sector.
leader position of the Japanese combine more.
Cropcare operations recorded significant
harvester segment with the “Yanmar” brand,
On the other hand, it was a challenging sales growth in 2019/20, as sales rose
where the “WORLD” brand was able to
part as government changed the policy on by 41% in the year under review, while
capture a considerable share from the
Fertiliser Subsidy which affected us badly revenue percentage growth was significant
Chinese segment of combine harvesters.
on financials, and the due from government compared to rest of the industry. Overall,
Emerging industries such as sugarcane
kept on dragging due to political changes the cropcare segment reflected a significant
was an opportunity for the division, where
which took place within the year. increase in gross profit and operating profits
“TAFE” and “Massey Ferguson” high horse
for a company in the agro chemical industry.
power tractors could grab a significant The outlook for the Browns Agri Solutions Innovative sales and marketing strategies
share of the high horse power segment with division is positive with number of products were critical factors in this performance and
the suitable implements. in the pipeline as new product development. strategic alignment of leadership contributed
In order to capture a significant market to product development and played a
The outlook for Browns agriculture remains
share, the division operates tirelessly to pivotal role in driving sales.
positive, given the sector’s widening product
introduce many new products in organic
portfolio, expanding regional presence and
and non-organic terms. AgStar vegetable seeds launched a new
innovation-led growth strategy. The sector
product, Carrot Kuroda, during the year.
will continue to add value to agricultural
AGSTAR PLC Chillies and Carrot Kuroda played an
communities across the island through
AgStar PLC has established its credentials important role in achieving targets during
widening its farmer networks and investing
as one of the market leaders in the the year. However, sales of Beans dropped
in farmer development and capacity
importing, blending and marketing of as government restricted imports of bean
building.
fertiliser products. The company offers a seeds during the year. Due to supply
range of organic and chemical fertilisers for constraints faced by maize suppliers from
BROWNS AGRI SOLUTIONS
use in agriculture, horticulture, floriculture, Indonesia, this segment of the business too
Browns Agri Solutions division comprises declined.
home gardens and green houses, having
of two main sub business units namely the
also forayed into agri machinery and
Crop solutions sub division and the Seeds
agri tech recently. The Group operates
38
LOLC HOLDINGS PLC
Future outlook the market showed a drop of Rs. 37/37 in and the produced ENA is sold mainly to
Going ahead, the company will continue its 2019 (December) against 2018 (December) the local liquor manufactures and other
focus on expanding contribution of each auction average. This drop has severely pharmaceutical & perfume manufacturers.
segment in tune with emerging needs and affected our bottom line which is reflected Bio Compost is produced since 2017/18
regulations. To enhance crop yield and through the decline in elevation averages. with the waste entirely from the Sugar
improved profitability, farmers need more Factory and the distillery operations.
MPL will become the single-largest
support in making the right decisions and Total cultivation at the end of financial
cinnamon grower by end of 2020 with
AgStar PLC is ideally positioned to be the year was 5,311.89 ha by involving 6,344
its 891 acres of cinnamon. The company
one-stop shop for the farming community farmers and total of 254,244.64 MT of cane
was able to acquire the Rainforest Alliance
in Sri Lanka. Sri Lanka’s agricultural sector was harvested during the year. During the
Certificate for 4 Estates and 3 factories and
lags far behind the region in automation of year under review, we were able to crush
ETP Certificate for 4 Estates in High Grown
infusion of technology and AgStar PLC is 226,016.62 MT of cane and produced
region.
gearing up to equip the nation’s farmers 16,004.45 MT of sugar. A total of 4,686,000
with the necessary knowhow and tools to Lts of ENA was produced by using 16,724
Future outlook
bring back past glory to the agri sector. MT of Molasses. Further 1,000 MT of
The socio-economic and political compost was produced during the financial
MATURATA PLANTATIONS LTD scenario within our own borders is equally year.
distressing. In this operating backdrop,
Economic embargos imposed on Iran by
our industry, which is already battered, The power generation project was launched
USA affected our low grown sale prices.
has an arduous task ahead. Depressed with an investment of Rs. 4.9 billion. This
Iran was one of the largest buyers of our
prices, climate change and productivity is an important sector and we plan to
low grown teas in the recent past. Recent
issues with ad-hoc wage policies will only generate 10 MW of power by 2021. CO2
reduction in world oil prices affected the extraction project will also be completed in
worsen industry woes. From the operations
Russian Ruble very badly (from January to the latter part of 2020.
standpoint in the short to medium term we
March 2020 – the drop is approximately
will stay focused on optimising our yields
20%). Therefore, most of our exporters to Future outlook
in the fields across both elevations. We
CIS countries are discounting the current Improving productivity and adopting
will continue to rely and reinforce quality
tea market prices to recover the losses on advanced technologies in improving the
management with sustainable agriculture
past sales made to CIS countries in rubles harvest will be a key focus area while
and manufacturing practices to sustain our
on delayed D/A terms. COVID-19 outbreak enhancing its footprint in the modern trade.
market positioning for finest quality teas. It
in unprecedented proportions has resulted Export options are also being evaluated.
will be imperative to optimise costs whilst
in postponing the tea auctions, seen
prioritising and investing in strategic capex,
reduced demand for tea at the auctions and
digitalisation of processes, team building
delay in transporting teas for cataloguing.
and on key and dedicated social and
These factors may affect the market
environmental initiatives. We will continue
conditions and prices of tea.
to give precedence to risk management
Maturata Plantations Ltd (MPL) has and good governance–highly warranted,
manufactured and sold additional 283,331 given the complexities in today’s context.
kgs and 500,870 kgs of tea respectively in There is, however, much hope for recovery,
the current year against the last financial particularly, in the medium to long-term
year respectively. However, NSA drop if stakeholders rally and work together –
of Rs 48.92 Per kg against last year has finding pragmatic solutions to the pressing
affected the bottom line. The company has issues within the industry to clear and lead
continued to invest in cinnamon and timber the way forward towards sustainability.
planting and so far has invested more than
Rs. 150 Mn for the year. GAL OYA PLANTATIONS
Gal Oya Plantations produces sugar since
Conventionally, the tea auction market 2012 after a complete revitalisation of
prices were expected to rise after a wage the Hingurana Sugar Factory. Sugar is
increase. Even though in February 2019 sold under the brand name of “HIngurana
the basic wage of the workers increased Sugar” for the 8th consecutive year.
from Rs. 500/- to 700/- (40%), the Auction Galoya Plantations commenced the Extra
Tea Market prices reacted inversely and Neutral Alcohol (ENA) sales on 2018
39
LOLC HOLDINGS PLC
Browns Hotels & Resorts managed to surge in the market

with innovative package/bank promotions and booking
options using promo codes for individual bookings and
also offering value additions for larger cooperate groups in
providing coach services.
Leisure
SRI LANKA TOURISM INDUSTRY by registered businesses in the tourism key market segments. With the assistance
IN 2019 industry. It is likely that with the on-going of Sri Lanka Tourism Development Authority
The tourism industry, which was severely COVID-19 pandemic, which will have a (SLTDA), the government has formulated
affected by the Easter Sunday attacks, devastating impact on tourism, such relief short term and long-term plans to rebuild
managed to achieve a modest 2.3% growth measures would be expanded further. the industry.
in 2019 compared to 4.6% in 2018. A Schemes were also introduced to grant
working capital loans at concessionary India, United Kingdom, China, Germany,
notable decline was observed in tourist
rates to registered businesses under the and Australia were Sri Lanka’s top five
arrivals following the issuance of travel
Enterprise Sri Lanka initiative. Further, Value international tourist generating markets
advisories by main countries of tourist
Added Tax (VAT) on registered hotels and from January to December this year. India
origins following the Easter Sunday attacks.
tour operators was reduced to 7% in June was the largest source of tourist traffic to Sri
Tourist arrivals from all major regions,
2019 and eliminated in December 2019. Lanka, with 19% of the total traffic received
declined in 2019. Europe continued to
Measures were also taken to improve the from January to December 2019. The UK
be the largest tourist origin for Sri Lanka
security situation in the country in order to accounted for 10% of the total traffic, while
with 887,572 arrivals, accounting for
build confidence among tourists. According China, Germany, and Australia accounted
46.4% of total tourist arrivals. However,
to the estimates of the Sri Lanka Tourism for 9%, 7% and 5%. However, declining of
tourist arrivals from Europe declined by
Development Authority (SLTDA), direct arrivals from China and European markets
12.8% in 2019 in comparison to 2018,
and indirect employment in the tourism recorded from the beginning from Jan 2020
despite the increase recorded in arrivals
sector is 4.6% of the total labour force in onwards.
from Central and Eastern Europe, with an
impressive growth of arrivals from Russia. Sri Lanka. The industry will need support
The total number of international tourist
In terms of tourist arrivals by countries, from the government in the form of various
arrivals to Sri Lanka from January to March
India remained the leading country of origin incentives to surmount this crisis.
2020 was 507,311. No tourist arrivals have
with 355,002 arrivals, followed by the UK, been recorded for the month of April 2020
China, Germany and Australia. However, BROWNS HOTELS & RESORTS
due to the termination of all passenger
remedial measures taken on the policy Performance Review flights & ship arrivals into Sri Lanka from
front, improvement in security conditions, The leisure and entertainment industry is 18th March 2020. Total arrivals recorded
financial support for businesses in the considered as one of the main industries from January to April 2019 were 907,757.
tourism sector, tourism promotion and affected by the COVID-19 outbreak. The In comparison to January to March last
softening of travel advisories by mid-2019 sector is experiencing a rapid and sharp year (2019), a decline of 31.5 % has been
helped revive tourist arrivals at a faster drop in demand at global level. With the recorded for the same period in 2020.
than anticipated pace by the end of the closing down of airports and the quick The largest source markets recorded for
year. Accordingly, tourist arrivals gradually spread of the virus across countries, both the period from January to March was
recovered, recording only a 4.5% decline domestic and foreign demand reached India, followed by the United Kingdom and
on a year-on-year basis in December 2019 zero level. The lockdown effects within Russian Federation. During this period,
from the decline of 70.8% in May. the country has hampered the interim almost 95% of tourists travelled by air to Sri
businesses from the local market and Lanka.
An economic relief package including a
recovery will largely depend on how fast
debt moratorium was introduced covering Browns Hotels & Resorts utilised the 3
economic activity picks up internally and
both capital and interest on loans taken months’ period after the April 19 Easter
reopening of borders and the recovery of
attacks to upgrade all booking systems
40
LOLC HOLDINGS PLC
and channels and also permanent system revenue recorded as Rs.118 million which value of the development is estimated at
integration, which connect to all booking translates to 28 % revenue drop YOY. USD 18 Mn
channels, respectively.
Dickwella Resorts & Spa - The year- With the view of catering to discerning
With the price competition faced from end average occupancy recorded as 56 high end customers, in 2017, group
all major hotel brands in Sri Lanka with %, which is a definite increase of 14% commenced the construction of an
the business downturn, Browns Hotels & occupancy increase YOY. The final revenue ultra-modern mixed development project
Resorts managed to surge in the market recorded as Rs. 258 million which is a 10% comprising a 136-room hotel, a high-end
with innovative package/bank promotions increase YOY. retail shopping mall and 118 apartments
and booking options using promo codes for on the location of Nasandhura Palace. The
individual bookings and also offering value Samudra Beach Resort Ltd - The Complex located in close proximity to the
additions for larger cooperate groups in 172 keys five-star property of Samudra Velana (Hulhule) International Airport. The
providing coach services. Beach Resort Ltd., Sheraton Kosgoda project is nearing completion with finishes
Turtle Beach Resort was commissioned being done.
Eden Resorts & Spa - By the end of the for commercial operations on the 29
financial year, 28 % occupancy declined January 2020. This property will be Browns Investments PLC signed an
YOY and ended the financial year revenue managed by Sheraton as the operator agreement with the Barceló Hotel Group, in
of Rs. 614 million which is 27% revenue and the first formal function was held from the year under review to develop a complex
dropped from the year 2018/2019. In the 29 February to 3 March 2020. This of three hotels in North Malé Atoll, Maldives.
addition to April Easter attacks and international five-star property is located Barceló will join Browns Investments in
COVID 19 impact, Eden Hotel completed with a unique view of the Indian ocean and developing three 5-star hotels with 470
refurbishment work renovating of 27 deluxe adjoining broad water stream which joins keys in North Malé Atoll, with an investment
(27 Deluxe Rooms (ground floor) Bathroom the sea along the property. The swimming of USD 30 Mn for a stake of 33.33% shares
refurbishment and soft refurbishment of the pool is the largest pool in a resort of Bodufaru Beach Resorts Ltd. The total
rooms and also the Swimming Pool Deck property. The hotel is well equipped as an value of the development is expected at be
from July – Nov 19, which has resulted in international five-star property with several USD 150 Mn.
considerable impact on the revenue and categories of star class accommodation
marketability during the renovation period. options. Apart from the shareholder agreement,
Barceló Group signed five management
Awards won during the year under review Due to the COVID - 19 pandemic all the contracts to manage 3 leisure properties
includes, National Business Excellence above-mentioned hotels are being operated in Maldives and 2 properties Sri Lanka.
Award 2019 – “Merit” (Large category – as repatriation centers. Barceló will be the operator for Bodufaru
Hospitality & Tourism sector) (Dec ‘19), which consists of 470 keys in North
Presidential Environment Award 2019 Maldives Operations Male Atoll, the property currently under
– “Certificate of Commendation” (Hotels “In Nov 2014, LOLC group obtained the construction Bodufinolhu with 100 rooms in
category) (Nov’19), National Sustainable leasehold rights of Bodufaru island in the the South Ari Atoll, and Nasandhura Palace.
Tourism Certificate – “Bronze” Winner 2019 Raa Atoll and in 2015 further expand its
(Aug’19), Holiday Check Award 2019, wings while obtaining the Bodufinolu island In Sri Lanka, Barceló will operate the
Recommended Hotel “Holiday Check in South Ari Atoll and Plots of Lagoon in five-star property in the southern coast,
Award” 2019 and Booking.com “Traveler Male Atoll. Subsequently, Bodufinolu island The Eden Resort & Spa with 158 keys
Review Awards” 2020. which is in South Ari Atoll was transferred and The Paradise Resort & Spa holding
to Browns Ari Resort (Pvt) Limited and 67 Eco-villas in Dambulla. Barceló Group
The Paradise Resorts & Spa - The year- is the 2nd largest hotel chain in Spain and
Bodufaru island which is located in the Raa
end average occupancy recorded 33% and the 29th largest in the world operating
Atoll was transferred to Browns Raa Resort
compared to previous year occupancy drop in 22 countries. With the signing of the
(Pvt) Limited”
of 41% YOY. The total revenue recorded agreement with Browns Investments,
Rs. 128 million which translate to 37% Hotel construction of Bodufinolu island is in Barceló Group made its maiden entry into
revenue drop YOY. Specially Dec 19 – progress and 70% of the construction work Asia through Sri Lanka and Maldives.
March 2020 revenues dropped drastically is completed and commercial operations
due to COVID 19 impact. are expected to commence from the 2021 Future outlook
winter season. The hotel consists of 100 Most of our properties remain temporarily
Calm Resorts & Spa - The year-end
rooms which includes 30 water villas, 63 closed due to global travel restrictions but
average occupancy recorded as 28%,
beach villas and 7 beach suits. The total are ready to open with the required safety
which is a drop of 17% YOY. Year-end
41
LOLC HOLDINGS PLC
This strategic move by Excel Restaurants CEYLON ROOTS (PVT) LTD. –

Leisure is expected to gain a substantial INBOUND OPERATION
opportunity to increase its presence in the The Inbound operations of Ceylon Roots
entertainment and food sector in the city. & Browns Tours reported revenues of Rs.
995 million for the year 2019/20, recording
protocols in place as soon as it is deemed The company, also having realised the
a decline of 28% revenue year on year. The
safe to open by the relevant authorities. potential value of food & beverage and
2019 financial year has been considered
Meanwhile we are closely monitoring our MICE market requirements in the city,
more effected and devastated annual
cost structures and have put in place decided to invest in the fully upgradation of
financial year with two major setbacks
several cost-management measures to several facilities at Excel World.
which directly impacted for travel and
reduce the impact on cash reserves. We tourism industry (Inbound sector) due to
The former “Park Premier” conference
also continue to closely engage with our the Easter attacks in April 2019 and COVID
facility was not available for several years
business partners and other industry impact the latter part of the financial year
but is now under renovation – looking
stakeholders and are committed to working where arrivals declined due to closure of the
forward to catering to a particular segment
together to put in motion a sustainable boarders/restrictions for countries due to
of clientele that generates a significant
recovery plan for the tourism sector. containment spread of COVID - 19 virus.
demand in this sector.
EXCEL WORLD ENTERTAINMENT Moreover, the renovation of the banquet Though Sri Lanka has been ranked as
PARK facility will not only cater to conferences, the Destination of the year by most of the
training and various other corporate world-leading travel magazines (Lonely
Performance Review
functions, including cocktails, but also will Planet), the SLTB statistics reflect both
Excel World Entertainment Park – located impacts evidently (April 19 – December 19
in the heart of Colombo - continues to also provide a right ambience for wedding
functions for the specific category of with average drop of 27 % due to Easter
offer the whole family, a ‘one-stop’ location attacks) and 31 % drop from January 20 –
for wholesome entertainment. The Pub clientele who look for great value for money.
March 20 due to COVID impact compared
and the Restaurant based within the Park to YOY figures.
Also, the Legacy food studio is another unit
is one of the Colombo’s loveliest venues
that is fully renovated in order to meet the
– serving elegant cocktails, variety of Despite the significant setbacks faced
existing food court standards of the city.
spirits & beverages and all kinds of food during this annual year beginning and the
to suit anyone’s taste-buds, and its newly Further, Pub N Restaurant, the popular end, Ceylon Roots’ inbound operation has
renovated banquet hall has the with a entertainment venue is another area that shown the resilience of quick recovery,
seating capacity available for 450 guests. is completed and running under the name reporting only 28 % impact overall year-
“Darley Road” at present. The Pub and on-year compared to the approximate
Last year, Excel Restaurants Pvt Ltd – declined of 50 % by large competitors in
the Restaurant caters to the present-day
which is a Group of Companies under the industry.
requirements of those ‘live entertainment’
Browns Investments PLC - has been
enthusiasts in the city.
granted franchise rights of Floor by ‘O’ and The company’s key strategy has been
Shore by ‘O’ – 2 leading pub and restaurant All in all the Excel World will be presented the diversified market portfolio, which has
brands in Colombo. as a total new experience in the area of helped the company recover quickly as
Food/Beverage, events and entertainment possible with the Personalised Engagement
This year, the company also further offering Multi-destination policy where the
and will be the most sought after place for
expanded by getting the franchise rights Maldives has been offered as the secondary
those who seek new experiences in this
for 4 more variety restaurants which are Destination offline and online b2b channel.
area.
extremely popular, namely – Loon Tao
Chinese Seafood Restaurant (Mt Lavinia), Consecutively, European and UK sectors/
Future outlook
Tsing Tao Authentic Seafood Restaurant, Il Arrivals have shown a 30 % contribution
The company plans to expand its presence
Cielo Authentic Italian Restaurant and Berlin to the revenue, and Arrivals from China/
in the entertainment sector by expanding
Sky Lounge. The agreement was signed India/Russia and Middle East markets have
the food and beverage facilities into Excel
in November 2019 and the operations contributed to balance 70 % of the revenue
World itself and by adding more restaurants
commenced towards the end January and respectfully.
in strategic locations in the country while
beginning of February 2020.
creating bigger value with the Excel World
property.
42
LOLC HOLDINGS PLC
In addition to traditional marketing

campaigns such as participating in travel
and trade shows with SLTB, the company
has already invested considerable
investments to target online/Web presence
to increase the direct FIT market.
The company also successfully launched

Tourist Coach operation covering major
touristic sites, signing a definitive agreement
with an international coach operator-based
South East Asia to target FIT direct clients
who book through OTA platforms. Though
the operating environment has been
challenging with local suppliers in some
parts of the tourist destinations, certain
anticipation could be expected with the
government’s health and safety protocol
due to Post COVID operational guidelines
for tourists in the future.
The company/Ceylon Roots hopes to

expand the fleet management portfolio
handling all logistic arrangements of all
major hotels island wide under strict
operating guidelines imposed by the
government to maintain health & safety
measures.
Despite current challenges faced by the

travel and tourism industry post-COVID,
the future developments would include
DMC rate contracting with hotel partners
through Channel manager development
where Ceylon Roots will have access to the
most dynamic rate structures including the
inventory and also distribute products (Sri
Lanka & Maldives) through B2B channel
to all worldwide partners. This is a more
cost-effective way of operating a tourism
business to Sri Lanka & Maldives with
Ceylon Roots Sri Lanka.
43
LOLC HOLDINGS PLC
The company will proceed prudently and will continue to seek

and evaluate new opportunities in non-conventional renewable
energy sources in Sri Lanka.
Renewable Energy
SAGASOLAR POWER (PVT) LTD Sunbird Bioenergy (Sierra Leone) Limited With the changes made by the new
Sagasolar Power (Pvt) Limited is the first holds 23,500 Hectares of land for management, Sunbird Bioenergy (Sierra
utility scale solar plant to be developed in sugarcane plantation and a factory with a Leone) Limited started its first fully fledged
Sri Lanka. The Plant is scaled at 10 MW. production capacity of 85 million liters of bio harvesting operations in December, 2019
At time the plant was commissioned, fuel per annum and operates a renewable and the company enjoyed a full season of
the largest plant in the country was energy power plant is one of the primary crushing.
approximately 1 MW. The Plant which was electricity producers of the country. The
commissioned in October 2016 has been company’s factory and renewable energy As a first goal, the company achieved a
in operation for over 3 years. The plant power plant together with its plantation and record of 4,300 hectares of sugarcane
supplies power to the Hambantota CEB the mechanised irrigation system is one of being planted, and the harvesting
sub-grid from its location in Baruthankanda, the largest agriculture projects in the African commenced during the 2019/20 production
Hambantota. The plant produces continent. Sunbird Bioenergy (Sierra Leone) season. This is the first time the company
approximately 19 million Kwh per year Limited is also one of the largest economic achieved that much new planting since
and thereby powers approximately 15,000 opportunity providers in the country with its incorporation. With this new planting,
homes and reduces the nations carbon over 5,000 employees the total sugarcane extent was extended
dioxide emission by 11,000 tons. to 4,826 hectares of which the company
With the acquisition, the management expecting to harvest 285,000 tons of
Future outlook techniques relating to agriculture practices sugarcane in 2019/20 production season.
were changed by the new management. The company managed to crush 175,529
The company will proceed prudently, and
A team of consultants that specialised in tons by mid of April 2020 of sugarcane
will continue to seek and evaluate new
sugarcane cultivation, were contracted leaving over 100,000 tons in the field
opportunities in nonconventional renewable
in 2019 who has extensive experience in due to the lockdown & the restriction on
energy sources in Sri Lanka.
the industry. Due to these key strategies, inter-district movements as a result of the
already the company is experiencing a COVID-19 pandemic. Accordingly, the
SUNBIRD BIO ENERGY SIERRA LEONE
tremendous improvement in the sugarcane company had to stop the sugar production
In June 2019, BI acquired 66.67% of the
yield. cycle short of few weeks.
holding company, Grey Reach Investments
Ltd through BI’s subsidiary, B Commodities Further, there has been improvement in During the production season of 2019/20,
ME(FZE). GRI is the holder of a 75.1% the operations and the basic operating the company managed to produce 10.5
stake of Sunbird Bioenergy (SL) Limited levels, for eg. the sugarcane yield increased million (Cane to RS ratio- 61 liters) liters of
is an Agro-based company incorporated from 75t/ha in 2018/19, and to 90t/ha in RS. Consuming 9 million liters of RS, 8.5
in Sierra Leone. It produces Extra Neutral 2019/20 season. This increase in yield led million liters of ENA was produced (RS
Alcohol (ENA) as per the global industrial to increase bio ethanol production as well to ENA ratio- 95%). This was the highest
standards using sugar cane as the raw as power production from the bagasse. production ever achieved by the company
material and generate power and export to Not only that but it also led to significantly from its incorporation.
the national grid with a power generation increase the power export to the national
capacity of 32MWh. Addax Bioenergy holds grid which intern increase the revenue
the balance 24.9% shareholding in Sunbird generation of the company.
Bioenergy (SL) Limited.
44
LOLC HOLDINGS PLC
The company is in the process of

establishing sales channels to establish
a strong selling structure which then will
signal the comprehensive achievements of
the BI group since the investment date.
Future Outlook
We believe the economic actives in Sierra
Leone will be predicted at much lower
level for the rest of the year since two
pandemic attacks during the past 08 years’
period (Ebola in 2014/15 and COVID-19
in 2020). However, on recovery there is
serious potential in the investment and
the company expects to generate higher
returns to the shareholders in the medium
to long term.
45
LOLC HOLDINGS PLC
Browns Engineering aims to improve its market share in the

telecommunication industry in Sri Lanka to be the turnkey
solution provider for operators while venturing into new
overseas markets. Further, Browns Engineering plans to
expand its operations towards infrastructure development
Construction projects in roads and bridges, water and sewerage, and
electrical and piling work in Sri Lanka and the Maldives.
BROWNS ENGINEERING & expand its operations towards infrastructure Sector-wise Financial Performance of
CONSTRUCTION (PVT) LTD development projects in roads and bridges, Sectors in 2019/20
Browns Engineering & Construction (Pvt) water and sewerage, and electrical and a) Total Revenue- sector-wise (from drafted
Ltd is a Subsidiary of Browns Investments, piling work in Sri Lanka and the Maldives. SCL-company F/S)
established with the key intention of serving
- Water - Rs. 3,082 Mn
as the engineering and construction arm of SIERRA CONSTRUCTION
- Telecom - Rs. 2,291 Mn
the group. Browns Engineering is currently The construction sector grew by
- Road - Rs. 4,181 Mn
engaged in three major sectors namely, 4.0% in 2019 mainly supported by
- Civil - Rs. 3,377 Mn
Telecommunication, Civil construction government infrastructure development
- Electrical - Rs. 336 Mn
management and MEP design and projects, compared to the contraction
- Piling - Rs. 11 Mn
construction services, with dedicated of 2.5% recorded by the sector in 2018.
- System Engineering - Rs. 15 Mn
employees to spearhead & drive the growth During the year under review, several
of the organisation. road construction, rehabilitation and The Sierra Construction brand has
maintenance projects were continued with become synonymous with high quality,
Browns Engineering is currently improving financial support from foreign and local which is why the company is the preferred
their market share in telecommunication sources. Institutions such as ADB, JBIC, choice for high profile infrastructure and
industry & have become one of the major World Bank and other financial institutions construction projects across the country.
players in the telecommunication market funded infrastructure development during The longstanding engineering and
within a period of one year. Browns the year under review. Investments in large technical resources in the company enjoy
Engineering is a strategic partner of scale infrastructure by the government such prequalification in all sectors, strongly
Huawei Technologies and ZTE Lanka, while as improvements in the road network, water supported by greater mechanisation and
providing services to the telecom operators supply projects and telecommunication advanced technology. The entire range
of Sri Lanka including Sri Lanka Telecom activities continued through the year. On of machinery used in construction is
PLC, Dialog Axiata PLC, Airtel and Hutch. a positive note, domestic preference was available with the company ranging from
Browns Engineering provides services given for execution of many of the projects. light to heavy contraction machinery and
in laying of fibre cables, construction of
equipment. In addition, the company’s ISO
telecommunication towers, optimisation Sierra Construction’s highly diversified
14001 and ISO 9001 certifications add to
of networks, site maintenance and related and balanced portfolio includes expertise
its impeccable credentials.
civil works. Browns Engineering is a brand in construction of Water and Telecom
which is distinguished for its fully fledged projects, Roads and Bridges, Electrical, Apart from its reputation for superior
Outside Plant services for Fibre networks. Civil and Piling. In an effort to control a construction quality in any kind of
great extent of its value chain, the company construction work with any size of project in
Future outlook has strengthened its vertical integration sectors such as water, telecommunication,
Browns Engineering aims to improve its by setting up crusher plants, ready-mix roads, civil, electrical and piling, the
market share in the telecommunication concrete supply plants and asphalt plants company is also engaged in supply of
industry in Sri Lanka to be the turnkey to lower raw material costs and bring down fertilisers, concrete ready mix and asphalt
solution provider for operators while final cost of construction. Technologically premix; manufacture and supply of all
venturing into new overseas markets. advanced piling machines have also been types of cables; IT solutions; property
Further, Browns Engineering plans to introduced to accelerate the piling stage. development including apartments;
46
LOLC HOLDINGS PLC
operating the Elephant corridor hotel in • (Supply & Laying of HDPE / DI Pipes • Sri Lanka Dialog IDC Maintenance (AMC
the leisure sector; network installation and for Distribution Network in Kaduwela, Dialog IDC Project)
maintenance services; site acquisition for Homagama, Padukka and Seethawaka
tower sites and architectural and designing DA Areas) • Preventive and Corrective Maintenance
services. of Optical Fiber Network (OFN). – Island
• Replacing of Transmission and Wide
Sierra Construction is a joint operation with Distribution Mains form Orugodawatta to
Toda Corporation, Shapoorji Company and Kaduwela • Unit Rate Contract - 2019
LOLC in order to be more competitive with
• Hemmathagama Water Supply Project • Supply ,Delivery, Installation, Testing &
foreign contractors in Sri Lanka. Widening
maintenance of Value regulated Lead
its regional presence, its subsidiary in India,
• Jaffna Killinochchi Water Supply Project Acid (VRLA) Battery Bank
Sierra India, explores opportunities in the
Indian telecommunication infrastructure • (Supply and laying of water district • ZTE Receiving Bill of Engineering
market. Further, its subsidiary in Qatar is Networks in Palai,Kodikamam, Outsourcing
tapping into the local telecommunication Poonakary,Puttur,Nawatkuli, Karainagar,
infrastructure market. Going further afield, Pungudutivu, Vaddukkodai, Kattudai, • Implementation services purchase for
the company is engaged in the construction Nallur Zones, JMC Transmission Pipeline Dialog FTK with Ericssion
of roads and infrastructure facilities in and construction of PEIC/JKWSSP/
the Maldives. It has established two new • Master frame work agreement for the
Network/2014/02)
subsidiaries in Myanmar exploring the supply delivery Construction Installation
telecommunication infrastructure market • Attanagalla Water Supply Project Testing & commission of Street Light
in Myanmar. Sierra Construction (Fiji) PTE Lamp Poles along with Site & Power
LTD and Sierra Construction (PNG) Ltd • (Laying of DI/PVC Pipes Fittings specials acquisitions
were established with the aim of expanding DI Valves Manhole Covers and Surface
telecommunication networking over Fiji Boxes for transmission and Distribution Road Projects
Island. Sierra Construction envisions the Mains in Attanagalla Area) • Central Expressway Project (CEP-2)
sector to strengthen further with the return Package-B. (RDA/CEP-2/PK-B)
• Construction of Siyambalanduwa Water
of political stability as post-Covid recovery
Supply Scheme • Rehabilitation and Improvement to
takes place.
Jaffna ponnalai point pedro road (AB 21)
• Construction of Galigamuwa Water
from Chainage 1+830 km to 14+600km
Major projects in 2019/20 Supply Scheme
(SCDP/WB/JF/WK/07)
Civil Projects
• Katana Water Supply Project (Tender
• New Bridge Construction Project Over • Rehabilitation / Improvement and
for Subcontract of pipe laying works
the Kelani River Maintenance of 71.81Km Rural Road in
operation & Maintenance)
Jaffna District in the Northern Province –
• Kandy Lakeside Walkability Improvement Package 3
Project Stage 1 Telecom Projects
• Defence Tower Project - Package I & II • Rehabilitation/ Improvement and
• Municipal Car Park Project in Kandy Design & Build Five Numbers of Self- Maintenance of 100.31km Rural Roads
Supporting Communication Towers with in Vavuniya District in the Northern
• Construction of Proposed Training Province - Package 4
Equipment Cabins – Package I & II
Center, Hostel Building & Canteen at
Thelawala • New Data Center at Piliyandala Awarded Projects commencing as at
(Construction Completion & 31st March 2020
• Development of Bio - Diversity Park at
Kotte Rampart Maintenance of Propose Development of Water Projects
Dialog Axiata PLC Data Center) • Supplying & Laying of Water Distribution
Water Projects Networks in Jaffna City Area
• Provisioning of Mega Line New
• Towns East of Colombo District Water
Connections though UR Contractors • Construction of 10,000 cum Capacity
Supply Project - Package 3
Ground Reservoir at Nikahetikanda
• Accelerated Expansion of Fiber Access
– Network
47
LOLC HOLDINGS PLC
Construction
System Engineering Projects

• Supply & Installation of Electro
Mechanical Equipment & Accessories for
Waste Water Treatment Plant at Koggala
Export Processing Zone
• Supply of Spares for Dehiattakandiya

Intake Vertical Turbine Pump
• Construction of a Pump House and

Supply & Installation of Wet Well Pumps
for Wastewater Treatment System at
Koggala Export Processing Zone
• Supply, delivery and installation of multi

stage horizontal split casing centrifugal
pumps for Madana for Hiriwadunna wss
Projects in the Pipeline to be awarded

in 2020/21
Water Projects
• Pyi Gyi Tagon Water Supply Project,
Mandalay – Myanmar
Road Projects
• Rehabilitation/ improvement and
maintenance of 69km rural roads
in Colombo District in the Western
province -package 01

maintenance of 82.79km rural roads
in Kaluthara District in the Western

maintenance of 87.87km rural roads
in Kaluthara District in the Western

maintenance of National Road (A018:
Pelmadulla to Padalangala Road section
Ch: 0+000 to 66+000)
48
LOLC HOLDINGS PLC
Browns battery division will add new batteries to its portfolio

in order to serve its customers in the best possible manner.
Opening of new hybrid centers in strategic locations is planned,
while Industrial batteries for telecommunication sector and
tyre segment has been earmarked as growth areas which will
Manufacturing & Trading further support the healthy performance of the division.
BATTERY DIVISION The world’s first ever graphene-applied VETERINARY PHARMACEUTICALS

The registration of vehicles, excluding lead-acid battery is set to come into DIVISION
three wheelers, Quadricycles and Motor mass production in Sri Lanka with the It has been a very challenging year for
homes decreased by 45% from 120,317 commissioning of Ceylon Graphene Sri Lanka’s Poultry industry. Hard hit by
vehicles to 66,193 vehicles during the Technologies’ (CGT) latest plant to convert the Easter Sunday attacks in April 2019,
year. Browns battery division has recorded locally mined vein graphite into graphene. the industry lost over 40% of demand
the highest bottom line in the 94-year overnight largely due to the slowdown in
history of the division in the year under GENERAL TRADING DIVISION tourism in the aftermath of the attacks.
review. Through its extensive exclusive Browns General Trading division offers an Furthermore, the disruption to the typical
and non-exclusive dealer network, Browns exclusive range of construction related tools demand patterns resulted in overproduction
has been dominating the automotive and accessories of utmost quality from an of chicken causing a higher than normal
battery segment. Since the Automotive array of world renowned brands. State-of- stock build up, leading to oversupply and
battery market is in a stagnated situation the art technology, innovation, functionality consequently to the collapse of prices for
as mentioned above, the division focused and durability are the key factors of our live birds by around 30% in mid-2019. Just
on new ventures. With the introduction of offering to the customer coupled with the as market conditions were normalising,
motorcycle batteries under Lucas brand, highest level of after sales service. the COVID-19 pandemic struck with travel
the division was able to increase the bans, lockdowns and curfews once again
sales by 58% in the motorcycle batteries The division’s contribution to the derailing the industry, thrusting it into crisis
compared to the 2018/19 financial year. construction industry continues to evolve mode in March 2020.
Browns hybrid care performed well in terms as it offers a high level of understanding,
of top and bottom lines, increasing the knowledge, creativity and expertise whilst Veterinary Industry average growth rate was
top line by 127% compared to 2018/19. delivering sustainable solutions for the key around 6-8% in last financial year and we
During the year under review, the division players in the construction, woodworking were able to manage 9% growth during
introduced several automotive battery and the DIY industry. last financial year. Key milestones for the
products including ISS batteries to cater year under review included, the introduction
Be it a power tool, cutting wheel, pressure of the competitive tick and flea protection
the new car and SUV market. Further, it
washer, power generator or even a simple product “Bravecto” and the introduction of
expanded the services provided by Browns
garden tool, Browns GTD is today geared the new Pet range “Vetina”. However from
Hybrid care by adding electric vehicle
with well-over a century of engineering January 2020 onwards, Raw Material was
charging facilities.
expertise. Browns is highly reputed insufficient to cater the market demand and
Browns battery division will add new for importing and marketing superior as a result most of the product cost were
batteries to its portfolio in order to serve quality, acclaimed brands of power tools, increased. Providing the required technical
its customers in the best possible manner. engineering tools and related equipment. support related to veterinary industry
Opening new hybrid centers in strategic through our technical team has been a key
The division is positive about the future
locations is planned while Industrial to success along with a 24 x 7 hot line to
with many additions planned underway
batteries for telecommunication sector facilitate our customers.
to further enhance the product portfolio.
and tyre segment has been earmarked
New product development and channel The division plans to introduce new items
as growth areas which will further support
development have been earmarked as key based on the customer requirements to
the healthy performance of the division.
growth areas for the division.
49
LOLC HOLDINGS PLC
In order to face the challenging market division with limited resources which was
Manufacturing & Trading which is on a growing platform, we are available within the division/company and
currently exploring new possibilities to have already put in place new resources to
import high quality air conditioners and face tomorrow’s challenges efficiently and
solutions manufactured in India which effectively.
cater to the anticipated rebound in the will enable us to enter different market
poultry and related industries. segments which are price sensitive. HEAVY MACHINERY DIVISION
The division continued to perform and
This will enable us to cater the segment
HOME & OFFICE SOLUTIONS DIVISION with the positive relationship it has with its
mainly in VRF and chiller solutions where
Home & Office Solutions division comprises valued suppliers and it further expanded
customers are looking at comparatively low
of A/C solutions division and the Browns to new business areas such as Backhoe
cost operations. It also identified that BG
Deals division. The A/C solutions loaders, Self-Loading Concrete mixtures.
air conditioners should reach the domestic
division, as a medium-sized player for air The existing products were further
market to secure market presence and be
conditioning solutions in the market, has developed and diversified to operate at
in the top 5 brands in the Sri Lankan air
penetrated into many new sectors during different levels.
conditioning solutions market in the near
the last financial year. This was mainly future. The division represents world-leading
achieved with a focused sales approach
brands with a higher market share and has
and by strengthening the service network POWER SYSTEMS DIVISION plans to introduce new products to achieve
where the customer confidence improved
Power Systems division is engaged in the the concept of a Total Machinery solution
to a considerable level - making Browns
business of providing power generation for the Construction Industry.
one of the preferred suppliers for all their air
solutions to the market. This includes the
conditioning requirements. Outlook for the construction industry
supply of branded diesel power generator
sets for industrial and upper domestic is promising with number of projects
As a brand, BG air conditioners have
markets, service and maintenance of and investments lined up. We hope the
reached a satisfaction level in the
generator sets and emergency breakdown transformation in the industry will happen
customers’ mindset as a complete
services Island wide. The division faced a soon in order to capitalise on the product
solution provider for air conditioning in the
challenging year in securing more projects range we have and also to add new
commercial and light commercial sector.
due to the economic situation of the products in a timely manner whenever
With this leverage, most of the leading
country. Delayed payments from the main required.
corporates are tied up with Browns for the
supply & maintenance of air conditioners contractors particularly affected the cash
flow of the division. Further, depreciation of BROWNS THERMAL ENGINEERING
for their existing locations and for all new
the SL Rupee against the US Dollar created Browns Thermal Engineering division
requirements.
a severe competition with the non-branded which is the pioneer in brass and copper
Our products and solutions are well proven product suppliers from China and India, radiators in Sri Lanka holds the market
as the best ’Value for Money’, especially in making thin margins to conclude a sale. leader position for its segment. The division
the government sector with superior quality However, with the strategic decisions of the is ISO and SLS certified and is situated in
at an affordable cost where the number division we managed to record a significant Makandura Industrial estate. The division is
of tenders awarded during this period has growth during the last 11 months of the into copper brass radiator manufacturing
increased compared to previous years. Tie- year where the last month of the year was a for Automotive, industrial, CGR heat
up with IGNIS is one of the key milestones complete contrast due to the global health exchangers and oil coolers. Further, we
for the division where IGNIS is a luxurious crisis. operate a full capacity injection molding
brand targeted at the top of the range in plastic component manufacturing section
the industry for domestic air conditioning Having realised the market potential in the which is mainly manufacturing automotive
solutions. times to come, we are well prepared with battery cases. Browns Thermal is the local
new strategies that would drive the division dealer for BOSCH products, RADCO brake
The Browns Deals division has seen a in to greater heights while maintaining the liners and brake shoes. BANCO, one of
severe drop in retail sector due to reduced market share and penetrating into other the world largest aluminum plastic radiator
footfall in the showroom business. However, untouched market segments with a different manufacturer tied up with Browns Thermal
an increase in corporate and key accounts strategic direction where competitors would to sell BANCO products in Sri Lanka.
sales and online sales was witnessed. not be able to enter without the required
resources and knowhow. We managed the
50
LOLC HOLDINGS PLC
Browns Thermal Engineering division will BROWNS INDUSTRIAL PARK profitable venture. Changes in their product
focus on reducing the cost of production As the company’s main warehouse and strategy from a custom made furniture
by optimising the usage of the resources. manufacturing and assembling facility, house to a large scale B2B player who
New product development will be key for Browns Industrial Park Ltd has played imports and sell reputed modular furniture
the division in order to capture the growing a vital role in the performance of the has paid them off immensely.
market needs. A manufacturing line to Browns Group. Located in Makandura,
assemble plastic aluminum radiators in Sri the Industrial Park has done well by taking
Lanka is planned in order to cater to the advantage of the increasing demand for
growing demand in the sector. office space and warehousing - a result of
the general growth of business and industry
BOILER DIVISION in Sri Lanka.
The boiler division markets world-renowned
boilers from the UK, South Korea and Future outlook
India. The division identified Indian-made Browns Industrial Park Ltd will continue
boilers as one of the key growth areas in Sri to expand business opportunities by
Lanka due to its pricing and the quality as developing an area of the property that is
opposed to other boilers. This was initiated currently under-utilised.
in order to capture the market share of the
Indian-made boilers and to offer customers AJAX ENGINEERS (PVT) LTD
an entire range of boilers with a mix of Despite the very negative market conditions
quality and pricing. post-Easter attacks in Sri Lanka which lead
to a standstill in the construction industry
Boiler division plans to expand service
for almost for the rest of the year, Ajax has
agreements with its customers and
recorded a profit after Tax of Rs. 105 Mn for
also with the new Indian-made boilers.
the year.
The division looks forward to capture
a significant market share in the boiler Some land mark Projects were carried out
industry. by the company last year, making Ajax
the No. 1 player in the Aluminium Façade
MARINE & LEISURE DIVISION industry in Sri Lanka. Sampath Bank head
Browns has been a leader in the marine office, Colombo Medical Faculty, Colombo
engines solutions sector for nearly half a Intercontinental Hotel, Unawatuna Araliya
century. Hotel a 305 Roomed five star hotel are
some of the projects carried out last year.
Together with Yanmar and Parsun, Browns
provides a comprehensive range of engines Gurind Accor Private Limited since it was
to fisheries, commercial, recreational and taken over in September 2018, has shown
coastal security markets. All types of boats a good potential as a business unit. Being
(fishing boats, classic motorboats, yachts, one of the pioneering glass processing
and inshore naval vessels) are fitted with company in the country, Gurind has built
engines marketed by Browns. Over the its reputation as a reliable and quality
years, Browns Marine has expanded its processing Company. Maintaining margins
portfolio to Fiber Glass raw materials as in a severely price competitive industry, and
well. upgrading the machinery to meet the future
demand remain the biggest challenges in
Future outlook the company.
Market is open for higher horse power
engines and in the Northern Region there Creations Furniture being the latest addition
are many opportunities to explore with to the setup has shown a tremendous
untapped areas. potential for the future. Creations turned
around their fortunes this year to become a
51
LOLC HOLDINGS PLC
During 2019/20, LOLC (Cambodia) achieved many major

milestones such as the successful launch of its mobile banking
app, iPay and reaching USD 1 billion in assets. The company
became an ATM Card Share switch member via Cambodia
Share Switch (CSS) which is managed by National Bank of
Overseas Expansion Cambodia for issuing ATM Cards.
PRASAC High productivity, strong client relationships of innovative banking products and services
The largest microfinance institution in and a prudential risk management through digital channels.
Cambodia, PRASAC, continued on its policy, combined with the knowledge
and experience of its able staff helped The Company’s culture of strong
growth trajectory during the 2019 financial
the Company achieve a commendable commitment to the highest standards of
year, successfully maintaining a major
performance despite increasing competition integrity and ethics and the pride it takes
share of the market by leveraging on the
and regulatory changes. The entry of large in its impeccable reputation has also been
largest branch network and the largest
banks into the Microfinance sector further a key competitive advantage and a vital
loan portfolio in local industry in Cambodia.
intensified competition during the year. element of its brand equity. PRASAC’s
PRASAC’s branch network in Cambodia
ability to harness the large scale of its
covers all 25 provinces and cities through
Growth Strategies operations, excellent customer service
180 outlets and 135 ATMs, operating in
Cambodia’s strong pace of economic and flexible solutions, combined with the
14,053 villages, which amounts to 86% of
growth combined with the country’s governance structure and strong internal
total villages. The Company has a staff of
political stability and low levels of inflation control systems, find it well poised to
9,091 to service its valued clients.
were factors which supported PRASAC’s enhance the value it creates in a growing
Financial Performance performance and which augur well for economy and thus to be a key contributor
the years ahead, despite the impact of to LOLC Group and its stakeholders.
The Company delivered a strong financial
performance in the year under review. COVID-19. The country’s strong banking
LOLC (CAMBODIA) PLC
Total assets grew by 30.2% over 2018 to and finance regulatory framework also
reach USD 3.1 Bn as at year-end. Total provides an excellent platform for sustained Market Overview
loan portfolio increased by 27.5% to USD growth. However, climate change and its Cambodia recorded GDP growth of 7.1%
2.5 Bn, with a portfolio of 417,000 clients. impact on agriculture will continue to be 2019 during 2019. The nation’s economy is
PRASAC also achieved the lowest NPL an area of concern whilst Cambodia’s agri composed of three main sectors: industries
ratio in the sector; well supported by sector is also burdened by a scenario of low (38.3%) including construction, textile and
the capacities of its team and the strong demand and low prices for its produce. The garment and mining; services (38.1%),
relationships it has established with clients. Company will maintain market leadership including tourism, trade and finance; and
The Company continued to maintain its whilst growing its middle income market agriculture (16.10%). GDP per capita has
leading position in loan portfolio quality and maintaining its market share in the low grown to around USD 1,650, making
in the sector with its Non-Performing income segment. It will also continue to Cambodia a lower-middle-income country,
Loan (PAR 30) ratio at 0.36%. Further, focus on the SME market in Cambodia. above the World Bank’s threshold of USD
the deposit outstanding balance reached 1,045 per capita.
Technology is today the preferred channel
USD 1,79 Bn with a total deposit base of
of delivery in the financial service industry As per Cambodia Microfinance Association
600,000 clients. Meanwhile, After-tax net
and will accordingly be a key driver of data, the Cambodian microfinance industry
profit increased by 31.6% to USD 101.
the Company’s growth strategy through enjoyed 29% portfolio growth, reaching
Mn from USD 78.6 Mn in 2018. Return on
channels such as mobile and internet USD 7.4 billion in March 2020. There are
Equity (RoE) was 28.2% and Return on
banking and Visa and Master transfers. almost 2.2 million borrowers in the country.
Assets (RoA) was 3.7% during the year
PRASAC will also look to diversify its Cambodia also has large microfinance
under review.
product portfolio and offer a broader range deposit-taking institutions licensed to
52
LOLC HOLDINGS PLC
collect deposits. As of March 2020, there manual, and data analytics reporting are maintain compliance to requirements as
were more than 2.8 million depositors and the tools to ensure that there is growth with well as to support growth.
more than USD 3.6 billion deposit balance. quality.
Microfinance providers in Cambodia are LOLC MYANMAR MICROFINANCE
quite inclusive, with countrywide operations The company also prides itself on COMPANY LIMITED
and innovative products both in terms of empowering its grassroots clients by
Amongst the top five microfinance
digital access and product diversification. holdings financial management training
institutions in Myanmar, LOLC Myanmar
The top 6 MDIs took up 87% of the classes for 532 beneficiaries of One Village
recorded a year-on-year portfolio growth of
portfolio market size. Moreover, Fin-tech is One Product (OVOP) in 8 provinces and
77% as at 31st March 2020 and increased
also popular in the industry, such as mobile 294 students from the Preah Sihamoniraja
its total asset to USD 106.5 million. In
banking, payment, and digital lending. Buddhist University. LOLC (Cambodia) also
2019/20, LOLC Myanmar achieved a major
has a radio programme, Idea for growth,
milestone by being SMART Campaign
Company Performance broadcast weekly and co-produced by
Certified, making it only the second
LOLC (Cambodia) is licensed to offer Cambodia Microfinance Association,
Microfinance Institution in Myanmar to
credit and deposit, regulated by the LOLC (Cambodia) Plc, and Credit Bureau
obtain this certification. This year also
National Bank of Cambodia (NBC). Its of Cambodia sponsored by Blue Orchard
saw the company reaching over 200,000
wide range of product and services are Finance aimed to deliver financial literacy
borrowers and its asset base exceeding
unsecured loans, secured loans, leasing, messages, consumer protection, self-
USD 100 million.
asset-backed loans, savings account, fix- motivation and small-business management
term deposit, money transfer and mobile mindset. During 2019/20, LOLC Myanmar’s loan
banking. LOLC (Cambodia) achieved 49% portfolio reached USD 76 million, reflecting
Future outlook a 77% growth from last year and deposit
growth year-on-year in its portfolio as of
March 2020 and increased its total assets LOLC (Cambodia) PLC is looking forward balance reached USD 13.5 million, growing
above USD 1 billion. The company is the to implement strategies to expand its book by 79% year-on-year.
third-largest company in term of borrowers through potential products and services.
Its main credit products to increase market The Company has maintained a very high
and the fourth-largest in term of portfolio,
share are Asset-Back Lending/leasing, level of Credit Risk Management with
depositors and deposit balance. During
Microbusiness Loan, Small and Medium the Portfolio-at-Risk over 30 days being
2019/20, LOLC Cambodia grew its portfolio
Enterprise (SME) saving products, along maintained well below 0.5% of the total
to USD 844M, marking 49% growth from
with ATM Card, VISA, Mobile Banking loan portfolio. A conservative approach
last year, and reached a deposit balance
Application, Plan Saving and Kids Saving. has been adopted in maintaining Liquidity
of USD 487M, with a 73% growth from the
Risk to accommodate the inordinate
previous year. The company is recognised
The company’s long-term strategy is delays in approval for foreign loans. Foreign
as one of the most efficient companies
to lower its operational costs by using Exchange Risks are being managed with
among the top 6 microfinance deposit-
technology to improve staff performance, a combination of off-shore and on-shore
taking institutions.
efficiency and productivity and lower cost SWAPS and back-to-back transactions
During 2019/20, LOLC (Cambodia) of funds and payment facilities to increase with banks operating in Myanmar where
achieved many major milestones such as savings. foreign currency is placed in deposit to raise
the successful launch of its mobile banking Myanmar currency.
Some technologies it leverages on are the
app, iPay and reaching USD 1 billion in
Tablet Project to speed up credit processing LOLC Myanmar is a licensed deposit
assets. The company became an ATM Card
and reduce paperwork; HR System to taking microfinance institution, regulated
Share switch member via Cambodia Share
better manage personnel information, by Finance Regulatory Department of
Switch (CSS) which is managed by National
performance analysis, and capacity the Ministry of Finance in Myanmar. The
Bank of Cambodia for issuing ATM Cards.
building; Customer Relation Management company offers a wide range of credit
The company also attained ISO/IEC 27001
to help line managers, analysts and front facilities including Group Loans with
Information Security Management System
line staff to better their services, thereby fortnightly and four weekly payments and
Certificate, while gaining Financial Rating
retaining client loyalty. Micro Loans with monthly repayments
Grade A and social Rating Grade BB+ from
of capital and interest designed for the
Microfinanza. Consistent implementation LOLC (Cambodia) PLC also plans to focus Micro Sector; Enterprise Loans with
of the directive on credit risk grading, on preserving healthy liquidity levels as monthly repayment of capital and interest
expected credit loss, credit operating measured by its Liquidity Coverage Ratio for the SME Sector; Employee Loans for
and adequate Capital Adequacy Ratio to wage earners with monthly repayments
53
LOLC HOLDINGS PLC
partnering the loan disbursement. Some deeper into the Java island considering
Overseas Expansion processes which are still paper-based are the population density, income pattern and
steadily being automated for better service resource availability. By 31st March 2020,
and faster processing times. 22 branches were established of which
21 are located in Banten and Bandung
and; Agricultural Loans for the farming The company further increased its branch regions. Consequently, the total customer
community with repayment of capital and and service center network from 49 in base also increased three-fold from 10,200
interest structured to meet the seasonal 2018/19 to 65 during the year under review, in 2018/19 to 36,600 in 2019/20 while the
requirements of crops. while the customer base too expanded portfolio increased by 126% from USD 1.5
from 40,145 to 59,703, reflecting the Mn to USD 3.4 Mn.
Future outlook positive acceptance of the company’s
offerings. The total portfolio grew from USD While the Group lending methodology
The onset of the COVID-19 pandemic
7.5 Mn in the preceding year to reach USD remains key to its success thus far, the
at the end of March 2020 and the
11.9 Mn in the year under review. eventual aim is to establish a ‘hub and
measures taken to curtail its spread had
spoke’ model to optimise resources and
an adverse effect on economic activities. The Microfinance Bank also unveiled some bring down operating costs. However,
This resulted in a total breakdown of MFI unique products for the local population due to the outbreak of COVID-19, the
business activities in April and May 2020. during 2019/20, including three-wheeler implementation has been postponed until
The effectiveness of the measures taken leasing and other products in the pipeline conditions are more favourable. The hub
has seen a fast return to normal in June which can be expanded to other income and spoke model is expected to be more
2020 and a quick recovery is expected generating assets. Further, Pak Oman cost-effective while also garnering a wider
baring the sectors related to tourism and Microfinance Bank plans to scale up the customer base.
manufacturing sector catering to exports. value of loans from PKR 150,000 currently
Myanmar’s economy, which was just to PKR 500,000 by focusing on garnering During the year under review, SSV
opening up to the world but not globalised more micro SME customers. Since 50% started a mobile collection service to
could prove fortuitous for its post pandemic of the nation’s economy is agro-based, collect customer rentals in the field via
recovery. POMBL has plans to support customers to mobile devices online and in real-time
lease agri equipment. Towards this, POMBL which helped the company to monitor
PAK OMAN MICROFINANCE has identified certain crops such as cotton, performance and prevent fraudulent
BANK LIMITED maize etc. for agricultural financing - not activities in the field. When it comes to
Pak Oman Microfinance Bank Limited as an equated monthly instalment but as a innovating products, SSV is planning to
(POMBL) is a Public Limited, unlisted bullet loan to be paid back after the harvest. extend products from Micro Group Loan
Pakistani Company which was incorporated presently to start Micro Individual products
in 2006. POMBL’s major shareholders During the year under consideration, Pak with the existing customer base for high
include the Ministry of Finance - Sultanate Oman Microfinance Bank was restructured value transactions. As the company
of Oman and Pak Oman Investment such that Karachi, Lahore and Islamabad implements its ambitious plans, the core
Company Limited with a 66.67% and are designated as three separate profit banking system is supporting all these
33.33% holding respectively. In 2017, centres to enhance efficiency. Although endeavours. The global pandemic has
LOLC was invited to infuse its internationally POMBL already holds a deposit-taking tampered our ambition to be a USD 40 Mn
recognised expertise to turnaround the license, it has yet to embark on offering company by 2021, with the forecast being
bank. During the year under review, the liability products and intends to focus revised downward to USD 24 Mn by 2021
mission of the management was to set in on this in the upcoming financial year from USD 5.6 Mn presently. The 270 million
place the systems and processes that have by extending savings and fixed deposit Indonesian population offers a promising
been proven successes in its other markets products and loans from the State Bank of market when macro conditions improve.
such as Indonesia, Cambodia etc. Pakistan.
Many of SSV’s customers in Indonesia
A sophisticated IT system was installed PT SARANA SUMUT VENTURA (SSV) suffered due to disruption of supply chains
with real-time lending modules which will Sarana Sumut Ventura (SSV) strengthened out of China on which they depend for
enable mobile collections and customer its footprint in Indonesia’s Microfinance raw materials for their small businesses.
on-boarding. During the year under review, market in the year under review by growing The company has been able to support
POMBL worked closely with a digital from 6 branches in 2018 to 22 in 2019/20. customers with warmth and compassion
platform of UBL titles OMNI which is one A strategic decision was taken to penetrate
of the local mobile wallets in Pakistan in
54
LOLC HOLDINGS PLC
to tide over the crisis which gives us great sector. The ASKI Group of Companies IADB’s products include deposits, different
pride. The staff has been trained stringently partnered with LOLC Holdings in early 2019 loan products for Micro, Small and Medium
in prevention and hygiene measures. and duly converted Alaylayasa Kaulnaran Enterprises (MSMEs) and other services
Lending Investors to LOLC ASKI Finance such as remittance services and bills
LOLC Management Indonesia is the Inc. With the investment by LOLC Holdings, payments.
Holding Company through which the the equity of the company was increased
company invested in SSV (formerly from USD 100,000 to USD 3.3 Mn. In 2019/20, IADB attains major milestones
a venture capital business), which is such as:
now being remodelled to cater to the Looking ahead, despite the negative
• Approval of the BSP for three (3)
Microfinance segment. impacts of COVID-19 on the global
additional branches;
economy, strong resilience is expected from
PHILIPPINES the ‘bottom of the pyramid’ customers that • CAMELS (Capital adequacy, Asset
LOLC ASKI FINANCE INC. the company caters to. Coupled with the quality, Management, Earnings, Liquidity,
strong foundation laid during the initial year, and Sensitivity to Market) composite
Considering its largely unbanked and
LOLC ASKI Finance is looking forward to a rating of 3. This is an international rating
under-banked population, Philippines
bright future. While continuing to improve system used by regulatory banking
offers strong potential in the Micro, Small
on its cost-effective, centralised processing authorities to rate financial institutions;
and Medium Enterprise (MSME) sector.
mechanism, LOLC ASKI Finance will also and
LOLC has leveraged on this opportunity to
look to add new products that cater to the
expand its operations in serving the bottom • Approval of six (6) branch-lite units
specific needs of its clients.
of the pyramid population with financial (BLUs) in different areas in Luzon.
products developed specifically to cater to
INTER-ASIA DEVELOPMENT BANK IADB is looking forward to effectively
their requirements, supported by strident
(PHILIPPINES) achieve its strategic objectives and
economic growth during the year under
review. Philippines recorded a GDP growth The country’s real gross domestic product business plans in terms of the Bank’s
of 5.9%, ending the year with a GDP of (GDP) experienced a decline of 0.2% mission and vision and the country’s
USD 376 Bn for the year 2019. The GDP year-on-year (y-o-y) in the first quarter of economic and financial thrust. IADB’s plan
per capita income increased from USD 2020, which is a significant drop from the to expand is to bring more and better
3,190 in 2018 to USD 3,337 in 2019. 6.7% growth achieved in the last quarter financial services at lower cost to MSMEs
of 2019, due to the Taal volcano eruption and offer them a varied and widened range
Company Performance and coronavirus (COVID-19) outbreak. of products in consistent with the BSP
Household consumption and capital policy on financial inclusion by extending
Against the backdrop of favourable
formulation too experienced a significant financial system closer to the Filipino,
operating conditions and the efficient cost
reduction due to the implementation of especially to the financially underserved and
structure and the centralised processing
enhanced community quarantine (ECQ) unserved.
mechanism of LOLC ASKi Finance, along
in Luzon (the country’s largest and most
with the know-how of LOLC Holdings PLC,
populous island) and other parts of the LOLC FINANCE ZAMBIA LIMITED
the company was able to break even by
country by the National Government (NG). The LOLC Group’s Microfinance arm
September 2019. In the process, LOLC
ASKI Finance increased its portfolio from to entered the Zambian Microfinance industry
Despite of these uncertainties, the banking
USD 3.7 Mn by March 2020. to serve the bottom of the pyramid which
system remained sound and stable with
holds much potential for growth in the
well-capitalised banks, manageable
LOLC ASKI Finance Inc is a partnership African nation. LOLC Finance Zambia
loan exposure and coverage to absorb
between LOLC Holdings PLC Sri Lanka Limited is currently awaiting final approval
the unexpected losses relating to the
and ASKI Group of companies in the from the regulator, Bank of Zambia, to
pandemic. Asset quality remained stable,
Philippines. ASKI is a highly-recognised commence its operation. Microfinance
with net non-performing loan (NNPL) ratio
and respected group of companies in Institutions (MFIs) in Zambia are seen as
at 1.2% and gross NPL ratio at 2.2%, as of
Philippines with a variety of products an opportunity for micro-entrepreneurs
end-March 2020.
including micro insurance and microfinance. to expand their businesses and enhance
The roots of LOLC ASKI Finance can be Inter-Asia Development Bank (IADB) economic development. Increasing access
traced back to April 2017, when the original achieved its Y-O-Y 56% growth of portfolio to MFIs can be viewed as an important step
company, Alaylayasa Kaunlaran Lending as of December 2019 with an asset base of towards building the foundation for other
Investors, was formed under the ASKI above USD 12 Million, and deposit balance livelihood improvements, including proper
Group of Companies to cater to the MSME of USD 5.5 Million (18% growth from last
year).
55
LOLC HOLDINGS PLC
FINA TRUST MICRO FINANCE BANK The economy of Nigeria advanced 1.87%
Overseas Expansion Fina Trust Microfinance Bank obtained year-on-year in the first quarter of 2020
its licence in September 2009 from the compared to the 2.55% growth in the
Central Bank of Nigeria and commenced previous period, against the backdrop of
its operations in October 2009 in the state significant global disruptions resulting from
nutrition, increasing access to education of Lagos. the COVID-19 public health crisis, a sharp
and employment, and decreasing the risk of fall in oil prices and restricted international
transgenerational poverty. The Company is amongst the top trade. It was the slowest pace of economic
microfinance institutions in Nigeria, expansion since the third quarter of
The Zambian economy is largely dependent providing microfinance services of loans, 2018. However, the country’s economy is
on the copper industry as it is the second- savings and customised products to cater expected to grow by 2.4% in 2021.
largest copper producer in Africa. The salary employees, micro and small medium
nation’s GDP has expanded at a healthy businesses.
rate over the past five years due to copper
exports and a strong services sector, but In the last few years, the Bank has
the incomes of about two-thirds of the attracted patronage from Small & Medium
population remains below the poverty line. Scale subsector of the economy, carving
According to International Monetary Fund a niche as a supportive Bank for Retail
(IMF) forecasts, due to the outbreak of businesses and empowering Micro
COVID-19, GDP growth is expected to fall businesses through distinctive services.
to -3.5% in 2020 and pick up to 2.3% in The Bank’s commitment to value creation
2021, subject to the post-pandemic global for all its stakeholders has earned it a solid
economic recovery. reputation as a responsible corporate
citizen and an employer of choice.
LOLC Finance Zambia is a deposit-taking
non-banking financial institution and will During 2019/20, Fina Trust Microfinance
provide finance products such as home Bank’s loan portfolio reached Naira
loans, motor vehicle finance, business 3.51million, a 26% growth from last year,
loans, and consumer loans, among other and increased its total asset to Naira 5.59
products, thus helping to narrow the million.
access to financial services gap locating its
The onset of the COVID-19 pandemic at
services close to the industrial mining areas.
the end of March 2020 and the measures
Leveraging on it advanced technological
taken to curtail its spread had an adverse
platforms and digital solutions, LOLC
effect on economic activities. Given the
Zambia will use a variety of channels for
nature of the portfolios and the activities of
distribution of its products and services.
clients; financial institutions were affected
The Bank of Zambia is encouraging use
by the ongoing crisis. The portfolios of
of alternative distribution channels such
banks often have a significant share of the
as contactless mobile banking aimed at
informal sector, a predominance of trade/
minimising in-person contact, reducing
commerce activities and vulnerable clients
physical cash and decongesting banking
who have few resources to “cushion” the
halls while at the same time advancing
impacts of the crisis. Due to the diminished
financial inclusion among vulnerable
earning capacity of clients, it threatens
communities during the pandemic. LOLC
to undermine the strong repayment
Finance Zambia is confident of replicating
culture on which microfinance depends.
its successes in its other overseas markets
The government of Nigeria are taking
and plans to leverage on its knowledge
measures to cushion the impact on financial
of Africa’s Microfinance industry with its
institution; such as, granting of regulatory
thriving operation in Nigeria.
forbearance to banks to restructure terms
of facilities in affected sectors
56
LOLC HOLDINGS PLC
The LOLC Group has gained impressive momentum with

regard to greater automation, digitalisation and adoption of
advanced emerging technologies to facilitate customers and
streamline operations for greater efficiency and lower cost of
operations. Through the year the company pursued a ‘data
Other Strategic Investments first’ strategy with greater emphasis on Business Intelligence.
LOLC GROUP used to be time-consuming tasks earlier. iPay is also being swiftly adopted in
LOLC Technologies comprises mainly of The ‘mobile first’ strategy is part of the Cambodia where it was launched in 2018.
Two verticals, namely, Group ICT Shared first phase with most of the process Plans are being drawn up to infuse more
Services, and Partnered Solutions. LOLC reengineering using advance mobile features into iPay that enable customers
Group IT Shared Services play a critical technologies, especially amongst the to click a button to fulfil their insurance
role as providers of efficient and effective field force who can work remotely from premiums and even for three-wheel
IT solutions to all business sectors anywhere which will be a game-changer. customer base of the micro finance
of the Group locally & globally, which business unit to pay their dues and avail
Furthermore, based on the requirements of mobile reload etc. iPay aims to become
encompasses Financial Services, Insurance,
of group businesses, the BPR will also second nature for consumers and to use
Plantation, Healthcare, Hospitality & Leisure
facilitate end to end process automation it for every aspect of their lives to make it
and Manufacturing & Trading.
such as recovery, yard management and easier.
The LOLC Group has gained impressive legal processes. The rolling out of the
momentum with regard to greater entire BPR strategy is divided into many OVERSEAS BUSINESS
automation, digitalisation and adoption phases. with the first phase now complete,
Pakistan
of advanced emerging technologies we expect the other two phases to be
completed by end-2020. LOLC Technologies is infusing a fresh
to facilitate customers and streamline
outlook in the Pak Oman Micro Finance
operations for greater efficiency and lower
The group’s adoption of latest technologies Bank by imposing the latest technology to
cost of operations. Through the year the
is evidenced by the preparedness of modernise the operation. During the year
company pursued a ‘data first’ strategy
group companies when COVID-19 struck, under review, major parts of the Lending
with greater emphasis on Business
as LOLC was one of most prepared stack were successfully introduced in
Intelligence.
companies to enable work from home from PAKOMAN which enabled business to go
day one. Further, call centres were operated to market in large scale. New Individual
Review of Operations
through work from home, a long-term Loan Module, Micro Group loan Module
Internal Business strategy that we had already worked out and Leasing Modules were rolled out to a
The recent Business Process Reengineering while preparing contingency plans in case live environment. Major improvements were
BPR embarked on promises to be a disaster struck. carried out on Group Loan implementation
transformative initiative because once it in order to monitor and comply with the
has been completed, it will bring about iPay regulator. As the first step, daily General
a sea-change in the group’s back-office LOLC Technologies’ unique fintech initiative Ledger processes were implemented and
operations, infusing efficiency in process & – iPay - an online payment platform is this was a major change operation process
technology and would eliminate of repetitive gaining traction amongst LOLC and non- and technology adoption, giving greater
tasks and improve front-end services. LOLC customers, sparking even greater flexibility for business to measure the daily
adoption during the lockdown period as performance rather than month-end. Going
Suitable investments have been made in
merchants and customers both sought one step further, the new technology is
robotic automation which lead to efficiency
a reliable online payment partner. Almost enabling Inter Branch General Ledger
improvements and cost savings and
80% of iPay customers are non-LOLC entries to measure branch performance
which can be operated with less human
customers. iPay became the NO. 1 most which adds further value to the business.
interaction especially on aspects such as
downloaded app on LankaPay’s platform. While enabling all these features, a
accounts and bank reconciliation which
57
LOLC HOLDINGS PLC
contractors and service providers led

Other Strategic Investments to weak levels of commercial activity
throughout the country resulting in severe
stress on businesses and the portfolio
quality of the Banks.
dedicated Group Loan module was rolled under review while new technologies
out to a live environment. Moreover, major such as Machine Learning and Algorithms Financial Performance
data migration was completed from PIBAS were adopted to provide more accurate, Overall, the Bank reported a moderate
to FUSION to transfer the business from the futuristic customer evaluations in terms of year on year growth in most of its key
old system to the new system in a way that maintaining healthy lending portfolio. financial indicators, despite the challenging
ensured minimum interruption of business economic environment that limited the
continuation for the team. A Business One of the prime focus areas going ahead opportunities. Whilst being prudent in
Intelligence Module was implemented live is becoming paperless. Towards this end, managing risks the Bank continued to
and reports are a major part of decision- one of the key developments is efficient and pursue opportunities to support financial
making and similar to rest of the locations. fast file approvals which address inherited requirements of the customers. This
issues of transferring manual files. As a resulted in the Bank recording positive
Philippines part of a blue chip conglomerate, LOLC growth and in the process crossing Rs.
Similar to other entities, in Philippines, Technologies is focused on disruptive 500 Bn. in total assets. A lack of business
LOLC Technologies introduced the Loan innovation and has heavily invested in activity in the first few months of the year
module live implementation with four disruptive technologies, the best example meant that the Bank achieved a profit after
new products successfully. Multiple other being the core banking revamping project tax of Rs. 3.7 Bn. in 2019, a growth of 15%
implementations, such as the moratorium called FusionX. Presently, this a Cloud compared to the previous year. Total Assets
process, ODI waive-off and cheque enabled, Data First, Mobile enabled and grew by almost Rs. 50 Bn. to Rs. 516 Bn.
return change waive-off were some key Micro Service based architectural product Deposits increased by 12% and Advances
developments that were completed is being developed. Through the year under rose by 16%. The CASA Ratio stood at
successfully. review, LOLC Technologies sustained a 28% which the Bank was able to maintain
culture of innovation in product design, despite difficult conditions and increased
Indonesia delivery and IT systems. competition.
Further entrenching its footprint in Indonesia Loans and Advances showed a healthy
SEYLAN BANK
with its successful microfinance expertise, increase of 16% and due to close
greater IT enhancements were introduced Operating Environment
monitoring of the loan book the Non-
with an eye on long-term growth. During During the year under review, Seylan Bank Performing Loan (NPL) Ratio came
the year under review, a process for Credit delivered a performance which could be down during the year despite the not
Information report development was termed commendable given the trying so conducive economic climate. The
launched along with introduction of Micro market conditions. The fall-out from the successful and oversubscribed Debenture
Individual loan and Group Loan top-up political upheavals in the latter quarter and the Rights Issue generated Rs. 9.3 Bn.
product developments to enable market of 2018 flowed through to the beginning of additional capital to further strengthen
differentiation. of 2019 affecting business activity and the capital adequacy of the Bank. This
consequently portfolio quality. The Easter was an endorsement of the confidence
Other initiatives Sunday attacks in the second quarter placed in our Bank by the investors and
As part of the new initiatives the Phase I of of 2019 and the events and uncertainty shareholders.
the Anti-Money Laundering package was that followed in its aftermath was a huge
launched successfully, which is developed set back to all activity in the country. The Strategic Progress
in-house to suit the business requirements. recovery has been slow and the presidential
Seylan Bank made strides in advancing
It is cloud-based, cost effective and tailor- elections towards the end of the year in
the use of IT and related platforms which
made system ideal for financial institutes its run up created yet another diversion
led to increased customer convenience
compared to the expensive off the shelf from the much-needed focus on reviving
and greater usage of our products and
packages. the economy. Low GDP growth, reduced
services. Its journey towards integrating
investments and low to non-existent new
new technologies to serve customers
A credit score based digital lending projects combined with slow settlement
better continued to gain pace. The
solution was developed during the year of dues owed by the Government to
increased focus on attracting new clients
58
LOLC HOLDINGS PLC
and upselling to the existing base through Lankan entrepreneurs while improving its Sunday Bombings in April 2019. Also in
our enthusiastic and energetic relationship market share in retail, SME and corporate 2019, together with partners, SLINTEC
resulted in Seylan Bank being seen as the sectors. Seylan Bank’s key business units launched T-hues, a natural tea-waste-based
leading bank in customer service in the were able to deliver the anticipated results dye. A nanotech-based DNA extraction kit
banking sector, through an independent despite economic downturn in 2019. co-developed with Maggenome was also
survey conducted by LMD. launched in January 2020.
SLINTEC
During the year, Seylan myplan, the Seylan A University Grants Commission-approved
Sri Lanka Institute of Nanotechnology
Senior Citizens Personal Loan Scheme and institution set up under SLINTEC, the
(SLINTEC) is a pioneer in nano and
the Seylan Housing Loan Specialist were SLINTEC Academy aims to build research
advanced technology research in Sri Lanka
launched to focus on retail business while capacity in the country by offering
and operates as public-private partnership
enhancing existing products with additional postgraduate degree programmes in
under the Ministry of Technology and
features. A High Net Worth proposition to nanotechnology and other advanced
Innovations and seven private sector
focus on serving the high networth segment technologies.
enterprises including Brandix, Dialog
of our customers, both existing and new,
Axiata, Hayleys, Loadstar, MAS, Lankem,
through a team of highly skilled relationship CEYLON GRAPHENE TECHNOLOGIES
LOLC and Browns. SLINTEC’s mission
managers with an array of distinctive LIMITED
is to build a world-class research and
products and services designed to provide Ceylon Graphene Technologies Limited
development centre specialising in
total convenience and improve returns on (CGTL), the joint venture between the
nanotechnology and advanced material
their portfolio of deposits and investments LOLC Group and the Sri Lanka Institute
sciences, with the objective of making
called Seylan Red was launched. of Nanotechnology (SLINTEC), is Sri
products more competitive using such
technologies and also to add value to Sri Lanka’s first graphene and advanced
The Bank has always wanted to be
Lanka’s mineral resources. It also aims material company. During 2019, Ceylon
the growth partner of choice for its
to build a nanotechnology and science Graphene Technologies launched
SME customers and the SME Banking
park for research, development, and the the first-ever Graphene applied Lead
Unit works closely with SME clients
commercialisation of innovations in Sri Acid Battery Technology together with
to assist with improvements in their
Lanka. Associated Battery Manufacturers (Cey)
businesses. The Bank has conducted
Ltd. This technology is applied in the
island-wide programmes relating to
SLINTEC’s research is primarily focused mass production and will be available in
‘better management of finance’, ‘how to
on Textile and Apparel, Sustainable the market by 2020 under the Lead Acid
market products’ and ‘managerial skills
Agriculture, Coatings and Composites, Battery range of Exide.
development’ as value added services. It
Medical Diagnosis and Preventive Medicine,
has established 13 regional credit hubs to With the aim of unlocking future
Printable and Electronic sensors as well as
improve the interaction with and speed of opportunities and opening new
Energy Research.
delivery to SME clientele. The Bank is fully partnerships in the global graphene
committed to engage with this important Equipped with the latest advanced industry, the company was represented
segment of our economy and nurture their equipment, SLINTEC conducts contract at some leading exhibitions in 2019 such
growth. The Bank has also introduced research, analytical services for the as the 18th Asian Battery Conference &
Regional Risk Officers to maintain high private and public sector stakeholders to Exhibition, Bali, Indonesia; The Battery
credit quality. Improvements made to the find innovative solutions. The SLINTEC Show in Michigan, North America’s
current risk rating model provide added Startup Engine help entrepreneurs start largest advanced battery technology
comfort to the Bank in operating within its and boost their business by providing free event where you can source the latest
risk appetite. incubation space, free use of analytical design, production and manufacturing
equipment, mentoring services, assistance solutions from the complete battery supply
Planning and preparation for the year
in developing a business proposal and chain, including components, materials,
2020, improvements for the infrastructure
guidance for technology valuation and IP testing, recycling and battery systems;
and uplifting of existing processes were
management. the IDTechEx Show in California which is
key priorities except for the main KPIs. All
a large-scale technical conference and
the business units including the extensive During the year under review, SLINTEC was exhibition for Energy Storage Innovations,
branch network is aligned to the Bank’s instrumental in disseminating knowledge Electric Vehicles, Graphene & 2D Materials,
strategic plan, short term and long term and training of Sri Lanka Police’s Special Internet of Things Applications, Sensors,
objectives of the Bank. The Bank is Task Force in explosives identification and Printed Electronics and Wearables.
envisioning being the growth partner for Sri detection in the aftermath of the Easter
59
LOLC HOLDINGS PLC
industrial boilers, dryers, bakeries, etc.

Other Strategic Investments However, the liquid fuel obtained may
not be directly used as fuel for motor
vehicles due to the possible presence of
a small quantity of impurities, ash and
wax from the feedstock. The company
CGTL is on the Advisory Board of The agriculture, process improvements for
has achieved several milestones during
National Graphene2D Association cinnamon agronomy and value addition,
the year in this project. It has processed
(NGA2D), the leading organisation in new product development in plant nutrition
the material available at Kerawalapitiya
the US advocating and promoting the and agro-chemistry. LOLC Advanced
using the bench top pilot to establish
commercialisation of graphene and Technologies (Pvt) Ltd. was set up to
exact operating parameter for optimal
graphene-like materials, which has explore sustainable business opportunities
operation.
assembled an unrivalled advisory board in the market with augmentation of Science
of thought leaders and experts from and Technology. It is a wholly-owned A plant capable of processing 4,000 kg per
commercial and industrial segments, subsidiary of LOLC PLC. day of plastic waste to pilot operation is
advanced material and technology being installed and the unit will be operated
companies and corporations, national The innovative new projects undertaken in
on a semi commercial scale to tweak the
labs, government agencies, investment the year under review are:
plant to form the basis of the design of a
firms, standard bodies and academic and commercial plant to handle 150 MT per day
• Rice Fortification Project: This invention
research institutions in the world. CGTL of feed.
relates to a process and a system for
is taking tremendous efforts to project
preparing fortified rice infused with
this unique mineral source of Sri Lanka Future plans include the design,
different fortificants which opens up
to the world by working closely with the construction, commissioning and operation
many possibilities to cater to specific
government, the Geological Survey and of a full scale such plant. In due course,
market demands. The plant design and
Mines Bureau and other local institutions. LOLC Advanced Technologies would like
fabrication is completed and the location
to earmark appropriately designed plants
CGTL also became a member of a is awaiting finalisation for the plant to be
for other sites where such waste material is
Consortium for Battery Innovation, the installed and commissioned.
collected.
only global pre-competitive research
• Charcoal, Steam and Power project
organisation promoting innovation in lead
in Philippines: This project consists of
batteries for energy storage, motive and
constructing and operating a plant which
automotive applications.
manufactures coconut shell based
Amongst its ambitious goals, the company charcoal and power and production
plans to be the High-Quality Graphene of steam from the byproduct of the
and Graphene Derivative manufacturer conversion process. A Memorandum of
in the market while improving research Understanding (MoU) was signed with
and acquiring commercial advantages a desiccated coconut manufacturing
in the energy storage industry for high company in Philippines and currently
performance graphene additives for a legal and technical feasibility study is
battery manufacturers worldwide. Driven being carried out to establish a company
by its innovative spirit, CGTL aims to in the Philippines. The investment plan
cater to worldwide demand for increasing and joint venture agreement is about to
superior energy storage systems driven by be signed however the project is delayed
innovation. due to the COVOD-19 situation.
• Waste Plastic to Pyrolysis oil: This

LOLC ADVANCED TECHNOLOGIES
project is aimed at processing and
(PVT) LTD.
recycling waste plastic collected through
During 2019/20, LOLC Advanced municipal and industrial waste in Sri
Technologies (Pvt) Ltd continued providing Lanka to produce usable pyrolysis
advanced technological consultation oil. This fuel may be used directly in
support to companies under the LOLC burners for providing thermal energy for
umbrella in the fields of precision
60
LOLC HOLDINGS PLC
Sustainability at LOLC
HUMAN CAPITAL knowing that their efforts will be recognised Safety and Well-being
Human Resources (HR) plays the role and rewarded in a fair and just manner, Employee well-being and safety is an
of a strategic partner in building LOLC whilst those who do not meet minimum ongoing priority for the group. The LOLC
Group’s businesses by maximising value performance criteria undergo rigorous Group is one of the very few corporates
creation through human capital and aligning training and development. offering unlimited OPD facilities for staff
it with company values, strategies and members and a wide array of other related
the needs of all stakeholders. A unique Building Future Leaders benefits such as critical illness cover,
centralised Human Resource management Strengthening of the leadership pipeline paid leave for special ailments, financial
framework enables effective management through succession planning has been assistance through dedicated company
of an extensive and diversified group pivotal to LOLC Groups’ success story of funds for prolonged sickness etc. The
of employees in both its domestic and optimising talent. As a part of the overall available club membership benefit is widely
overseas operations. HR thus plays a Group HR strategy a talent pipeline of hailed by employees which has given them
leadership role and is a catalyst that experienced and capable employees the opportunity to maintain their physique
enables all LOLC Group’s employees that are prepared and ready to assume weekly amidst the hectic lifestyle. A fully
to contribute at optimum levels toward leadership roles are identified and operational grievance handling policy
organisational success and to stand ahead developed. We believe that our employees ensures all staff concerns and grievances
of other competitors in their respective are motivated and engaged when they are independently handled and addressed,
industries. can see a career path for their continuous thus assuring employees of the peace of
growth and development. Promoting from mind needed to be fully productive in their
Structure within not only provides a clear path to job roles.
The LOLC Group has a unique HR greater compensation and responsibility,
shared service delivery model, centralised it also helps employees feel that they are LOLC values the diversity of its extensive
for greater control and service. This valued and a crucial part of the Company’s staff cadre which reflects the diverse ethnic
allows the Group to optimise a cadre success. The Group has tremendous talent, and socio-economic backgrounds and has
of 8,000 resources (excluding foreign experience, and skill amongst its resources ensured the welfare of these diverse groups
operations) whilst being supported by and in order to retain and motivate this within the organisation by maintaining
strong automation and digitalised systems talent, clear career progression has been policies and procedures regarding the
and processes. As a highly diversified charted, supported by investment in their same.
conglomerate, the Group derives its further training and development.
Gender equality and zero tolerance policies
competitiveness from its talented and
on sexual harassment guarantee that
dedicated employees operating within a Training and Development
female employees across the group feel
unique working culture. The LOLC Group has adopted a training
secure and respected.
framework which effectively identifies skill/
Rewards and Recognition knowledge gaps through a comprehensive
LOLC asserts a highly performance-driven annual training needs gathering
work ethos which is backed by a unique exercise which is formulated taking into
rewards and recognition framework. consideration employee performance and
This framework is designed with a clear annual business goals for each group
intention of boosting employee morale, entity. Training needs are structured into
attracting and retaining key talent whilst the three pillars: technical/job related
maintaining healthy attrition levels, thus capability development, professional/
elevating overall productivity. Our state- soft skills development and leadership
of-the-art performance evaluation system development to ensure employees
helps in identifying and assessing individual are ‘job ready’ and that their skills and
contributions to the overall company knowledge is consistently upgraded for
achievements. The performance evaluation better performance outcomes. The Group
mechanism categorises employees into HR strategy also focuses on including
different categories based on which the employees from overseas ventures to
employee reward and recognition is be part of the overall talent mapping and
decided upon. Employees at LOLC record leadership training plan of the Group to
high productivity, perform well in their ensure the strengthening of the overseas
roles and contribute to bring in proﬁts talent pool.
61
LOLC HOLDINGS PLC
No. of Training No. of Associates Mandays Investment (Rs.)

Programmes Trained
386 4,969 12,406 40,529,278
Quarter No. of Training No. of Associates Mandays Investment (Rs.)

Programmes Trained
Q1 125 2,209 2,827 9,766,212
Q2 128 2,820 5,230 18,287,655
Q3 102 1,825 2,942 9,008,684
Q4 54 1,064 1,410 3,466,727
Type of Training No. of Training No. of Associates Mandays Investment (Rs.)

Programs Trained
Leadership 71 307 1,309 11,466,914
Technical 242 3,948 7,545 18,846,647
Professional 74 2,143 3,552 10,215,718
62
LOLC HOLDINGS PLC
STRUCTURE OF THE SUSTAINABILITY COMMITTEE
Board of Directors
Chairman of the Sustainability Committee
Advisory Panel (Senior Management)
Heads of Business Units across all businesses &

operational units including Regional Heads
Subordinate Staff (committee member)

from each business & operational unit
The Corporate Governance Labour Stakeholder Community

Environment & Fair Operating Practices and Engagement & Involvement &
Practices Human Rights Consumer Issues Development
63
LOLC HOLDINGS PLC
The LOLC Group’s commitment to its collective bargaining. The Group is revolutionising microfinance at
environmental and social responsibilities Principal 4: The elimination of all forms the grassroots by supporting communities
is evidenced in its proactive Sustainability of forced and compulsory labour. and building whole communities of
Committee. A member of the Board Principal 5: The effective abolition of small scale entrepreneurs to fulfil their
of Directors heads the Sustainability child labour. aspirations. Amidst a global trend of
Committee that reports to the Board Principal 6: The elimination economic uncertainty, the Group’s
once every three months. The Committee of discrimination in respect of strategic investments overseas have
comprises of one member each of senior employment and occupation. infused formidable financial stability and
management of each Business Unit of the resilience. Financial inclusion, women’s
Environment
company to ensure wider representation. empowerment, economic contribution to
Principal 7: Businesses should
The sustainability strategy, projects and building the Sri Lanka brand in overseas
support a precautionary approach to
efforts of this Committee are strongly markets and sustainable environmental and
environmental challenges.
backed by the top management in order social impact are some of the undeniably
Principal 8: Undertake initiatives
to implement change across group-wide powerful impacts LOLC is courageously
to promote greater environmental
operations. Unfortunately, the Easter spearheading:
responsibility.
attacks in 2019 and the pandemic at the
Principal 9: Encourage the
end of the year and resultant high security LOLC Care
development and diffusion of
conditions and social distancing measures Ahead of its time, LOLC Care in 2009
environmentally friendly technologies.
made it difficult to implement all planned constructed the ‘Madiwela Special
projects for the year. Anti-Corruption Education and Home for Boys’ by way of
Principal 10: Businesses should work generous donations as well as personal and
Apart from Group level projects, individual
against corruption in all its forms, voluntary contributions from staff members
branches locally conduct socially and
including extortion and bribery. and customers. Proceeds from the LOLC
environmentally impactful projects that
Care fund are channelled towards the
benefit their immediate community, ranging
SOCIAL CAPITAL welfare of these children and towards the
from supporting local places of worship or
LOLC’s footprint in Sri Lanka spans maintenance and upkeep of the home
schools to enhancing infrastructure and
diverse sectors such as leisure, agriculture which provides shelter to orphans.
conducting cultural events.
& plantations, agri-inputs, renewable
energy, construction, manufacturing and Powering Education for the
LOLC GROUP’S COMMITMENT TO
trading and strategic investments. After Underprivileged
THE UNGC PRINCIPLES
establishing its Sri Lankan operations 40 LOLC prioritised serving education sector
LOLC Group is a signatory to the United
years ago as a Centre of Excellence, the and searched for the most deserving
Nations’ Global Compact (UNGC) strategic
LOLC Group has ventured out further afield schools in remote areas with the support
policy initiative and its established code of
into emerging markets in the Asia-Pacific and guidance of the island-wide Browns
principles that promotes sustainable and
and African regions to great success. Dealer network. Located in Sivalakulama
responsible business practices among
Armed with its tried and tested business in Galenbindunuwewa off Anuradhapura,
corporate and non-corporates alike around
models, technological solutions, shared the students of Thodamaduwa Vidyalaya
the world.
services and expertise in microfinance, the hailed from the hardworking farming
Group has rapidly entrenched its footprint community and labour groups who work for
The Ten UNGC Principles
in the markets of Cambodia, Myanmar, a daily wage. When the ‘Browns Shakthi’
Human Rights Indonesia, Pakistan, Philippines, Sierra team initiated the renovation project in
Principal 1: Businesses should Leone, Nigeria, Zambia and the Maldives. Thodamaduwa Vidyalaya, the school library
support and respect the protection of As the only Sri Lankan financial institution was a dilapidated room with a limited
internationally-proclaimed human rights. operating in these markets, the LOLC number of books and chairs, whereas
Principal 2: Businesses should ensure Group has successfully exported its local children mostly read under the tamarind
that they are not complicit in human microfinance expertise overseas to benefit trees. They practiced for volleyball matches
rights abuses. customers at the bottom of the pyramid, in the harsh grounds or paddy fields.
reflecting its profound impact on the triple The Principal made note of a spacious
Labour
bottom line – people, planet, profits - in library and playground as the immediate
Principal 3: Businesses should uphold needs of the school. Brown & Company
local as well as global markets.
the freedom of association and the PLC collaborated the CSR activities and
effective recognition of the right to established ‘Browns Shakthi’, an integrated
64
LOLC HOLDINGS PLC
CSR brand for the Browns Group. The will encourage them to start their own such as hats, bags and baskets.
maiden project under the ‘Browns Shakthi’ businesses, to further improve or even LOLC adds value by linking them with
initiative refurbished Thodamaduwa to expand their ongoing businesses. designers who advise them on trendy
Vidyalaya in Galenbindunuwewa. Within CLC has designed this programme with designs and colours for greater market
four months, the dilapidated room was the expectation of conducting at least acceptance. LOLC strictly adheres to an
refurbished into a spacious building with one programme within one geographical exclusion list of harmful products it does
book cupboards, a recommended list of location. Accordingly, CLC has been able not finance.
books, chairs and tables while the thorny to successfully cover almost 31 selected
area in the school premises was cleared, locations with multiple diverse expertise • In the agricultural sector, LOLC supports
levelled and renovated into a capacious programs conducted with the collaboration a large number of customers using
playground. Separate areas in the ground of industrial experts related to each of deep wells and encourages them to
were marked as a volleyball court and the specialised fields. The project is now use sprinkler systems to better manage
running tracks. ‘Browns Shakthi’ donated moving forward with utmost success water consumption in the dry regions.
football, cricket, netball and athletic island wide. CLC employees engage
• Training customers on greenhouse,
equipment to the school as a support to in community engagement programs
compost, drip irrigation by partnering
develop the sporting skills of current and and philanthropic activities regionally.
with experts from government
future students of the school. The‘Browns Branches are encouraged to celebrate their
institutions or from agriculture faculty
Shakthi’ CSR initiative has unique features anniversaries with a local CSR project.
from the Jaffna University.
as it promotes social integration to enhance
socio-economic values and involves all Supporting partners • LOLC provided training to customers in
the stakeholders of Browns, such as • Moreover, we have been continuously growing special shrub on their fences
the Management, Employees, Dealer educating our vehicle dealer’s related to which is a sustainable material to be
Network, Suppliers and other Stakeholders the actual interest rates, commissions harvested and given to collectors for
in their missions to uplift and empower paid and product features of our asset sustainable firewood, providing them
the marginalised and underprivileged back loans, and provide finance for short with a simple way to earn extra income
communities. With the head start taken at term working capital requirement. We
remote Anuradhapura, ‘Browns Shakthi’ have created new permanent income • LOLC routinely partners with
aspires to be a strength to many more to over 9,800 clients by providing three- government institutions such as the
deprived groups across the island through wheeler financing. By cooperating with Export Development Board, Vidhaata
upcoming community development the main agent in the country provides Madhastanaya and NLDB to expand the
initiatives and contribute to uplift the socio- technical support on how to maintain impact of its intervention.
economic values of Sri Lanka. Browns is the three wheeler. The Financial Service • In Diwulapitiya, close to 200 families are
committed to creating a better future for Advisor (FSA) will educate all clients engaged in handloom manufacturing
every Sri Lankan and pledges to oblige about the interest, fees, charges etc. under LOLC’s group lending model.
their social responsibility through ‘Browns and provides a repayment schedule to Although, these granular customers
Shakthi. the clients. possess the skills, they work on orders
with low margins. With LOLC’s financial
Technical Assistance Programme As the largest NBFI in Sri Lanka, support, they are now self-employed.
CLC Diwibala is a series of “Technical LOLC contributes far more than mere Once again, LOLC linked them with
Assistance programmes” to provide the financing to the poorest of the poor in the designers to train them for better
required technical knowledge/ skills for the country as the following instances designs and colours. Today, Madampella
the CLC Wasana clientele island wide. show: has a thriving handloom industry
Under the key objectives of this project, • LOLC supports industries such as choir powered by LOLC.
CLC Diwibala will act as a succession of based manufacturing, turning choir into
comprehensive workshops to educate brushes, mats, mattresses with over • LOLC also holds training programmes
our micro finance clients about the 1000 families engaged in this cottage on green and organic cultivation and
potential occupational opportunities while industry in the Northern Province. Some how to compost for a circular economy.
providing them with the required technical of these customers manufacture for
knowledge, assistance and real-time • LOLC is sharing the benefits of its
the local market and even accept sub
training prospects. This project is also advanced technological platform with
contracts for choir exporters to Japan.
aimed at promoting and empowering 300,000 microfinance customers –
The customers in this region also
female entrepreneurship. These workshops sending them receipts via SMS and
manufacture palmyrah based products
accepting loan appraisals via tab
65
LOLC HOLDINGS PLC
thereby reducing paper consumption. • LOLC introduced iPay to micro - Financed local traditional export crafts in
With less customers physically visiting customers and partnered with mCash Sind and Hyderabad
branches, LOLC can reduce the size of to collect rentals through mobile wallets.
its branches, thereby reducing overall As a result, customers living miles away - Supported handmade footballs and
carbon footprint for its stakeholder as from the city centres do not have to cricket balls for exports in Sialkot
well. travel to its branches to make payments.
- Supported Punjab customers with
• LOLC maintains the pradhyashalawa • In Sri Lanka we have funded vast organic farming techniques in wheat and
in many villages where the villagers spectrum of industries like brass, maize
congregate for all daily community pottery, choir, handloom industries
initiatives. Painting and repairs are done and provide technical knowledge and Indonesia
on a monthly basis by the company. support - In Indonesia support customers
engaged selling foods which is lucrative.
• LOLC partners with Sumithrayo and • We are also encouraging customers
ADIC to address social issues on to practice home gardens amongst - We also support these societies in their
addiction and also works with the Child granular customers at the micro level for social projects for customers along with
Protection Authority and experts to raise commodities like turmeric and ginger the support of staff.
awareness on drugs and child abuse. which have a high demand.
Suicides rates in North and East are high Cambodia
and youth are counselled and seminars • Staff volunteerism is prominent in LOLC, - LOLC financial literacy modules
organised seminars along with hotlines with staff raising funds on their own on savings & investment, income
for suicidal and depressed patients to initiative for the Cancer Hospital & expense, debt management,
reach out. cash management, and mind set
• Average loans were 50,000 few
development module to increase the
• Community-based training to teach years ago but has now gone up to
client’s awareness and understanding on
vocations such as mushroom and aloe 100,000 which reflects that customers
financial literacy. Various methods were
vera cultivation. LOLC also provides have grown and are taking bigger
designed to deliver such awareness
market linkages and even has their loans. 160,000 female customers
like in-class training, brochure, radio
businesses inspected by health are borrowing from us and fuelling
program, video clips, and campaigns.
inspectors so that they can benchmark the growth of their small businesses.
From January to December 2019,
their businesses. These small businesses would in turn
there are 532 beneficiaries of One
generate indirect employment. Reputed
Village One Product (OVOP) in 8
• LOLC has developed a catalogue management institution INSEAD
provinces (Kampong Cham, Prey Veng,
of customers’ small businesses conducted a strategic level study of how
Siem Reap, Kampong Thom, Pursat,
which serves as a ready reckoner for our granular customers have enhanced
Kampong Chhang, Kampot and Takeo
prospective buyers to connect with their lifestyles over a period of time.
Province) and 294 students from the
them. Most micro based customers are
Preah Sihamoniraja Buddhist University
women and are partnered with LOLC. LOLC CSR projects in Overseas
were trained in Financial Management.
They are fuelling innovation and in turn Markets
generating employment amongst their Pakistan
communities.
- Promoted liquid milk production by
• Micro housing loan of short tenor with financing 13,500 farmers in Pakistan
flexible interest rates are also being to achieve the government’s vision to
offered to granular customers to enhance liquid milk production in the
enhance their standard of living. country. LOLC customers there have
now diversified into producing dairy
• LOLC continuously trains staff and products like cheese, curd etc.
encourages them to acquire more
qualifications and even reimburses the
cost of recognised technical courses
and provides opportunity to pursue
further studies in banking and finance at
the Colombo University.
66
LOLC HOLDINGS PLC
NATURAL CAPITAL The structure of the LOLC Green Island-wide Schools Tree Planting project
Advocating corporate stewardship, we are
concerned and conscious of caring for our Reforestation committee of
living environment. It is essentially linked LOLC green sustainability committee
to our work culture and well in line with
the LOLC Group policy on environmental
responsibility. The LOLC Group believes in
partnering with customers and suppliers The Zonal
and other organisations that mirror our Principal Leader
concern for the environment, particularly
those who help us maintain high standards
in terms of environmental protection and
product quality.
LOLC Green Tree-Planting Teacher Branch

As part of the LOLC Green initiative, In Charge Manager
the Group is engaged in promoting tree
planting under the project ‘Engaging Young
Minds in Nature for Future Sustainability’,
which engages with schools and creates
a greener Sri Lanka by engaging students
and raising awareness on the need for Student Branch
greening and its impact to the environment Coordinator Coordinator
and climate change. The programme is an
effective in connecting children with nature.
Key members from the LOLC Sustainability
Committee have been appointed to
overlook and drive this project forward. By Solar Power Projects solar installation project at the Browns
31st March 2020, fruit bearing trees were The Group’s solar power initiative was Industrial Park in Pannala is envisaged to
planted across 300 schools island-wide. launched as an internally driven project be Sri Lanka’s largest roof top installation
Each branch office and its staff members focussing primarily on identifying and project.
were entrusted to work closely with the converting some of the Group’s properties
LOLC Group company, Saga Solar Power
administrators and the students of the into solar power generation buildings.
(Private) Limited opened the first-ever utility
selected schools to monitor and record Under this project, the Group made
scale Solar Power plant in Sri Lanka based
the growth of the plants. The branches significant progress by completing three
in Baruthankanda, Hambantota, producing
organise frequent orientation sessions with of its main solar panel installation projects
10 MW of power to the National Grid. The
the schools in order to create awareness at the LOLC head office premises in
development of this landmark plant is in
on the importance of planting and nurturing Rajagiriya, LOLC Motors workshop at
line with Sri Lanka’s National Energy policy,
trees to mitigate the effects of climate Kolonnawa as well as the Office located
which has the key focus of converting
change. The programme is led by a project at Shady Grove Avenue. With these three
fossil fuel used in Electricity Generation to
committee at every school comprising of projects plus Gal Oya and Saga Solar
Sustainable Renewable Sources. The 10
the school Principal, Teacher in charge, which is Sri Lanka’s first privately-owned
MW Solar plant, has been built on 45 acres
student coordinator and LOLC Green solar power plant with a capacity of 10
of land within the Energy Development Area
coordinators. Certificates and rewards were MW, all put together, today LOLC is able
declared by Gazette notice 1720/5 on the
handed over during the 2019/20 financial to produce 70% of its total annual energy
23rd of August 2011 under the Sri Lanka
year in recognition for the students who requirement to the national grid. All these
Sustainable Energy Authority Act. The Saga
demonstrated exceptional engagement projects generate 1.4 million units per
Solar project, the first of its kind by the
in the project and who have contributed month. With two new solar panel installation
Private sector, is over seven times the size
immensely for future sustainability. Rewards projects in the pipeline, at the Eden
of the largest Solar project in Sri Lanka at
were given only after a 6-month evaluation Resort & Spa in Beruwela and the Browns
present; which is the 1.3MW pilot project
period. Industrial Park in Pannala, the Group hopes
owned and operated by the Sustainable
to reach the 100% mark very soon. The
Energy Authority, located in Hambantota.
67
LOLC HOLDINGS PLC
Hambantota is known to have one of the highest levels of Annual Global Horizontal attributed to our initiatives. Further, time
Irradiation (GHI) in Sri Lanka. The project supplies approximately 20 GWh, which is sufficient spent by staff in office has also reduced
to provide the annual electricity needs of approximately 15,000 typical Sri Lankan homes. (due to reduced customer interactions)
The project reduces the nations carbon dioxide emission by 11,000 tons. which also benefits in terms of energy
consumption.
Irradiation vs Generation chart for the FY 2019/2020 – Saga Solar
LOLC recorded tremendous growth in the
Irradiation Vs Generation digital platform, iPay with an unprecedented
level of transactions and volume growth
2,500,000 250
in every aspect. The transaction volume
2,000,000 200 grew by 681% with the registered merchant
1,500,000 150 growth at 303% and a user registration
1,000,000 100 growth of 241%.
500,000 50
Loan Collection App
0 0
LOLC Group, which has a considerable
presence in the microfinance sector, also
April
May
June
July
August
September
October
November
December
February
March
launched its internal loan collection app to

ease the recovery process of loans. In rural
Generation Irradiation areas, where many have limited access to
the internet, monthly visits to the branch
are a must in order to settle their dues.
Based on the above, it is evident that the Manager and above grade employees by LOLC Group successfully reversed this
generation has been in sync with irradiation collaborating with a reputable commercial process – instead of customers visiting
levels in the area. bank in Sri Lanka. The loan scheme is branches, a single collection agent visits
offered for them to install solar panels at the customer premises and carries out the
The Saga Solar Project was awarded the their residences. Already, a total of 18 top loan installment collection, via a mobile
Mahaweli Entrepreneurship Presidential officials have obtained this loan facility and app. Whilst direct benefits can be seen in
Award in 2019, illustrating the positive the projects have been completed. LOLC the reduced use of paper, less travelling
impact and contribution made to the nation not only contributes to the community by customers also contributes towards
in renewable energy by LOLC’s leading and environment through the financing reducing the carbon footprint.
solar project. of projects, but each of our employees
get fully involved in the Group wide The LOLC Finance officer visiting the
The Group also operates a Dendro power sustainability initiatives. customer at his/her doorstep will accept
plant at Gal Oya. During the year LOLC the cash, which will be credited instantly
added 3 new projects currently producing Leveraging on Digital Platforms to to the customer’s savings account through
the following MWs: 30,000mw, 4000mw reduce impact on the Environment a point-of-sale machine. The account
and 15000mw respectively. LOLC Group holder then receives an instant SMS alert
Extending this platform, LOLC Group
consumes 2 million units of energy per confirming the fund transfer.
launched iPay – a platform beyond
month, spending approximately Rs. 492
payments. iPay allows both LOLC and non-
million rupees per annum. LOLC is now E-Learning
LOLC customers to use their respective
producing Rs. 32.5 million (per month) LOLC Group’s latest initiative towards a
bank accounts to make payments to
through solar energy which constitutes greener planet is the launch of an e-learning
a variety of merchants including utility,
about 70% of our total energy requirement platform. Users can now participate in
insurance, health care service providers.
per month. A total of 1.4 million units are corporate trainings (and even evaluations)
These initiatives had a direct, positive
generated, which proves that LOLC is close from the comfort of their own offices.
impact on the environment as the use of
to achieving 100% self-sufficiency. This means employees no longer need to
paper for statements, forms and other
communications was drastically reduced. travel to the head office to attend training
Concessionary loan for solar sessions. This offers the greatest benefits
With users no longer having to be physically
installation for outstation branches as travelling and
present to carry out their transactions,
Under this programme, a pre-approved indirect benefits such as reduced travelling accommodation costs (and the resulting
loan scheme at a concessionary interest (and the resulting pollution) could also be carbon footprint) have been greatly
rate is offered for Assistant General reduced.
68
LOLC HOLDINGS PLC
Energy Saving Measures does not keep physical documents, the • E-waste is recycled responsibly through
From an infrastructure perspective, LOLC requirement of having large filing rooms a third party certified company to dispose
virtualised their Enterprise Data Centre and costs associated with such operations of e-waste to ensure that the electronics
(which serves the IT requirements of all will also be drastically reduced. As a do not find their way to landfills.
LOLC Group companies) and its Disaster result of this proposal, 80% of operation
Recovery site in 2009. Between the years related documents will be minimised. In Adopting Renewable Sources of Energy
2012 to 2014, a total saving in power 2019/2020, the paperless solution was • The Agri-input sector uses one of its key
consumption amounting to Rs. 15,500,000 implemented at 55 branches out of 300 by-products of rice milling - the paddy
was noted. This roughly translates to branches island-wide with 10 already husk - as a source of energy to fire its
583,000 KWh (estimated 800 KWh per completed during the year. boiler during the process of rice steaming,
day). With the Group’s rapid expansion in thus eliminating the need to dispose of
the following years, where even overseas Reducing GHG emissions the husk and reducing what is sent to
entities are served through the Sri Lanka One of the main initiatives is using natural landfills. Further, it is also exploring ways
data centre, this energy saving is now building materials for the relocation use of to produce organic fertiliser using the
greater than before. Bio UAFF waste water treatment which large quantity of ash generated during the
does not use energy from the national grid. husk-burning process.
Around this time period, LOLC took a Bio UAFF is a combination of anaerobic
decision to replace all desktop computers • A group plantation company generates
floating filter technology and advanced
with laptops. Whilst laptops consume less 20% of its energy requirement within the
facultative bacterial technology. Bio UAFF
power, the need for additional wiring and factory through the use of steam-fired
technology includes a cultured special
UPS devices was almost eliminated. Based boilers, which are powered by Bagasse,
Bacteria Growing Media (BGM - made out
on calculations carried out at the time, an the fibrous matter that remains after the
of treated coconut coir fiber which is having
estimated 11.5 KWh per day per computer crushing of sugarcane to extract juice.
high specific surface area) to increase the
was saved as a result of this change over. efficiency of bacteria. There are no pumps
This does not include the power savings Optimising Water Consumption
used in this system, therefore, it runs with
incurred through the discontinuation of gravity flow system that is not connected to LOLC demonstrated its focus on water
UPS devices. Further, heat dissipation in the national grid. usage by introducing tap aerators and
laptops is much lower when compared with shower regulators to guest rooms to
desktop computers. Again, an estimated Reduce Energy Consumption regulate the flow rates of basin taps and
reduction of 64 BTU per hour per site was showers which substantially brought down
• Energy saving LED light systems are
achieved. We believe all these initiatives water consumption in the leisure properties
now in place at all Group locations
have, in their own special way, contributed during the year. Other initiatives include:
and air conditioners maintained at
towards a greener environment. low temperatures at night in leisure • In its extent of using waste as raw
properties, bringing savings on the material, treated waste water is used
Paperless Project
energy bill. in the irrigation of the garden while
This project was introduced to improve
purchasing mulch, soil amendments and
the service levels of our valued customers • Scheduled maintenance of hotel air
compost made of plant trimmings, or
while bringing the operational efficiencies conditioning and refrigeration system
green waste.
within the organisation. This project will at least twice a year, clean permanent
pave the road to many digital initiatives filters, condenser coils of dust and lint, • Coastal wash material is used for
that are being implemented. With this inspect and repair economisers on AC decorations in the hotel while non-
project, retaining and circulation of physical system, select and enable electrical chemical use policy has been adopted
documents will be replaced with digital equipment with energy saving features, in hotel detergent and pest control use
documents where accessing of such digital install timers on hood fans, exhaust by replacing harmful products with safer
documents are possible across the branch systems, and hood lights to optimise alternatives
network instantly at any time. With this electrical items.
implementation, relevant authorities can • The Eden Resort & Spa in Beruwela
take business decisions quickly as they • Replacing company fleet with electric fulfils the requirements for a Green
can view digital documents no sooner they and eco-friendly vehicles. A special Building, such as waste water treatment
are uploaded to the system as opposed rental scheme is offered to employees to plant in-house and usage of daylight
to the traditional method of waiting until switch to eco-friendly vehicles thereby during day time within the hotel coupled
documents reach them. As the company reducing the organisational carbon with natural ventilation.
footprint.
69
LOLC HOLDINGS PLC
Driving Sustainable Innovation carrier to infuse turmeric, cinnamon

• Sri Lanka is rich in the natural resource etc. as a carrier for end user at a
of graphite which sells at low prices in low price. Further, the Group is the
the global market as a raw material. In largest cinnamon grower and also
2010 when Graphene won the Nobel produces green tea, so raw materials
Prize, LOLC took note and worked on can be sourced in-house. Thus, the
devising a new technique to convert nutraceutical material is produced
locally available graphite into graphene locally by LOLC. We are currently
through value addition, thereby working on new technology to extract
increasing foreign exchange earnings valuable phytochemicals from plant
over 1000 times. Armed with a US and a patent is pending in this regard.
patent, LOLC has set up a factory and
• LOLC’s Research Hub supports
now operates a sustainable method.
farmers and scientists with technical
The company also manufactured
assistance by setting up a science
batteries with graphene and exports
hub that resolves any scientific or
under the Exide brand as cascaded
engineering problems for Group
100% value addition. LOLC is a Board
companies. LOLC’s thirst for new
Member of the US Association of
knowledge and scientific innovation
Graphene; and part of the Consortium
remains insatiable. More importantly,
of Battery Innovation, one of the biggest
the Group provides opportunities for
organisations in the world which invited
local scientists to work on exciting
LOLC to come on board.
projects and encourages a spirit
• LOLC is also one of the key partners of discovery and innovation not
at SLINTEC, the first local research abundantly available in Sri Lanka.
entity of this scale of public private
The LOLC Sustainability Committee has
partnership. It has pioneered
commissioned an independent consultant
conversion of non-recyclable plastic
to perform a comprehensive Carbon
into industrial fuel which is better
Footprint Analysis covering the LOLC
in quality than furnace oil with the
Group subsidiaries (Sri Lanka only) and
process giving a remarkable 80%
the Carbon Footprint report is scheduled
yield, one of the highest in the world.
to be completed and submitted in 2021.
More importantly it is a continuous
However, LOLC already contributes 70% of
process as opposed to a batch
its total energy bill to the National grid and
process. In keeping with LOLC’s
aims to reach 100% (Net Zero) in 2025.
approach, it is an eco-friendly
process as there is no emission,
since we use resulting hydro
carbon emissions as fuel for our
operations. This project addresses
two major problems - solid waste and
importation of industrial oils thereby
driving self-sufficiency. The first plant
will be established in Kerawalapitiya.
• LOLC addresses health and

nutritional needs of the nation
through pioneering Rice Fortification
technology patented to introduce
nutraceuticals to solve nutritional
needs. The technology enables
rice to be used as a nutraceutical
70
LOLC HOLDINGS PLC
Report of the Board of Directors
The Board of Directors of LOLC Holdings BOARD SUB COMMITTEES DIRECTORS INTERESTS IN
PLC takes pleasure in presenting their The Board has appointed the following sub CONTRACTS
Annual Report together with the Audited committees: The Directors have made the declarations
Financial Statements for the year ended required by the Companies Act No. 7
31st March 2020. The Audit Committee of 2007. These have been noted by
The Talent Development and Remuneration the Board, recorded in the Minutes and
PRINCIPAL ACTIVITIES Committee entered into the Interest Register which is
The Company’s principal activities are now maintained by the Company.
monitoring and managing the Groups’ The Related Party Transactions Review
investments and providing centralised Committee DIRECTORS REMUNERATION
services to its subsidiaries and associates. The Integrated Risk Management The remuneration is disclosed on pages
Committee 150 and 266 under note 12 and 51.1.1.
THE BOARD OF DIRECTORS The Company has a Board approved
The Corporate Governance Committee
The Board of Directors for the year under Remuneration Policy. This policy stipulates
review comprise the following : The mandate of each of these sub that remuneration should be linked to
committees is provided by their regulatory competence and contribution, while serving
Ishara Chinthaka Nanayakkara - to incentivise and motivate. This policy has
guideline or Board approved Terms of
Executive Deputy Chairman been taken into account when determining
Reference. The composition of these
committees is as prescribed by the relevant remuneration for both staff and directors.
Waduthantri Dharshan Kapila
Jayawardena - Group Managing Director regulation (where applicable) or as deemed
The Report of the Talent Development &
/ CEO most appropriate for effective functioning
Remuneration Committee is on page 76.
of the Committee. The reports of the
Mrs. Kalsha Upeka Amarasinghe - respective Committees are included in this
APPRAISAL OF BOARD
Executive Director Report on pages 75 to 79.
PERFORMANCE
Francisco Kankanamalage Conrad The Board sub committees are empowered The Company has established an annual
Prasad Niroshan Dias - Non Executive/ to call for additional information, and also self-assessment scheme for the appraisal
Non Independent Director to invite key management personnel to of the board of directors. Responses
provide further details, or to facilitate a to the self-assessment questionnaire
Deshamanya Minuwanpitiyage are evaluated by the Deputy Chairman
dialogue. This enables the Board to ensure
Dharmasiri Dayananda Pieris - and recommendations or concerns are
that proposed initiatives, changes to
Independent Director discussed with the board of directors and
procedures or enhancing of controls are
practical and also clearly communicated to actions taken accordingly where deemed
Dr. Ravindra Ajith Fernando -
the senior management. appropriate.
Independent Director
The Board welcomes Mr. Conrad Dias, who Committee Meeting minutes are tabled
has been appointed as a Non Executive at Board meetings. Thus, while the entire
Director of the Company during the year. Board is aware of Committee deliberations
and decisions, they have the assurance of
Miss Keshya Melana Amarasinghe has knowing that matters receive the focused
been appointed as alternate director to Mrs attention of sub committees.
K U Amarasinghe with effect from 12th May
2020.
The Directors profiles can be found on

pages 20 to 23.
71
LOLC HOLDINGS PLC
DIRECTORS SHAREHOLDINGS
Directors shareholdings are as given below.
As at 31st March 2020 2019

No. of Shares % No. of Shares %
I C Nanayakkara (in his name) 91,613,792 19.28% 91,613,792 19.28%
I C Nanayakkara (Commercial Bank of Ceylon PLC/ I C Nanayakkara) 79,000,000 16.63% 79,000,000 16.63%
I C Nanayakkara (Sampath Bank PLC/ I C Nanayakkara) 61,774,000 13.00% 61,774,000 13.00%
W D K Jayawardena - - - -
Mrs. K U Amarasinghe 23,760,000 5.00% 23,760,000 5.00%
F K C P N Dias - - - -
Deshamannya M D D Pieris - - - -
Dr. R A Fernando 12,600 0.003% 12,600 0.003%
RE-ELECTION OF DIRECTORS The Board is satisfied that the ability law or regulation, and to the best of the
In accordance with Article 88 (i) of the of these two gentlemen to function as knowledge of the Directors, the Company
Company’s Articles of Association, Mrs. K independent Directors is not affected by has been in compliance with all prudential
U Amarasinghe retires by rotation and being their years of service. Both of them have requirements, regulations and laws.
eligible seek re-election as a director. The conducted themselves in a manner which
has established their independence. The Company is fully compliant with
Board recommends her re-election.
Accordingly, the Board is of the opinion the Listing Rules of the Colombo Stock
Mr. F K C P N Dias appointed as Non- that both Deshamannya M D D Pieris and Exchange, including the rules relating to
executive director to the Board on 4th Dr R A Fernando should be considered Corporate Governance.
September 2019 retires in terms of Article independent directors. Both Directors meet
95 of the Company’s Articles of Association all other qualifying criteria necessary to be CORPORATE GOVERNANCE
and being eligible, seek re-election as a viewed as independent directors. The Report of the Corporate Governance
Director. The Board recommends his re- Committee can be found on page 79.
election. CAPITAL STRUCTURE AND Your Board of Directors is committed
DEBENTURES towards maintaining an effective corporate
Deshamanya Dharmasiri Pieris is over the governance framework by effectively
The stated capital of the Company is Rs.
age of 70 years and will be retiring, as implementing systems and structures
475,200,000/- divided into 475,200,000
required. The Company has received a required to ensuring best practices in
shares.
letter from a shareholder, communicating corporate governance. The table on pages
his intention to move a resolution at the The shareholding structure is given on 80 to 84 shows the manner in which the
Annual General Meeting for the re- pages 337 to 338 together with the 20 Company has complied with Section 7.10
appointment of Mr Pieris, as provided for largest shareholders. During the year, the of the Listing Rules of the Colombo Stock
in the Companies Act No. 7 of 2007. The share price ranged from Rs. 86/00 to Rs. Exchange (CSE) on Corporate Governance.
Board recommends his re-election. 194/90. As at the end of trading on 20th
March, 2020, the share price was Rs. TRANSACTIONS WITH RELATED
Deshamannya M D D Pieris and Dr R A
90/80. PARTIES
Fernando have served as Directors of
The Directors declare that the Company
the Company for more than nine years. The details of the Debentures in issue as
is in compliance with Section 9.3.2 of
Deshamannya Pieris’ experience and at 31st March 2020 are set out in Note 38
the Listing Rules of the Colombo Stock
expertise in governance and administration of the Financial Statements on pages 244,
Exchange pertaining to Related Party
are of great value in board deliberation 245 and 250.
Transactions during the financial year ended
and decision making. Dr Fernando’s
31st March 2020.
expertise on sustainable business is COMPLIANCE WITH LAWS AND
especially valuable to the LOLC Group as REGULATIONS In terms of LKAS 24, the Directors have
it focuses on sustainable development and The Company has not engaged in any disclosed transactions which are classified
environmental responsibility. activity that contravenes any applicable as related party transactions under Note
72
LOLC HOLDINGS PLC
51.1.1 on pages 265 and 266 of the which the Company is operating, including As far as the Directors are aware, the
Financial Statements. the macro environment, potential risks Auditors do not have any other relationship
and resource allocation. In determining the with the Company or any of its subsidiaries
HUMAN RESOURCES basis of preparing the financial statements nor do they have any interest in contracts
Human Capital Strategies of the Company for the year ended 31 March 2020, based with the Company or any of its subsidiaries.
are based on respected HR practices to on available information, the management
attract and retain right people. Policies has assessed the existing and anticipated In accordance with good governance
are in place to develop and motivate the effects of COVID-19 on the Group initiatives, audit partner rotation is practiced.
workforce for current and future business Companies and the appropriateness of the
The Report of the Auditors is given on
needs of the Company. use of the going concern basis.
pages 93 to 97.
The number of persons employed by the The Board has evaluated the resilience of
its businesses considering a wide range RESPONSIBILITY STATEMENTS
Company and Group as at 31 March 2020
was 905 and 11,141 respectively. of factors under multiple stress tested The Chief Executive Officer’s and Chief
scenarios relating to expected revenue Financial Officer’s responsibility statement
Disciplinary matters are dealt according to streams, cost management, profitability, appears on page 91. The Directors’
the board approved policies in compliance the ability to defer non-essential capital statement on responsibility for financial
with labour regulations. There was no expenditure, debt repayment schedules, reporting appears on page 92.
occurrence of any issue detrimental to cash reserves and potential sources
the harmonious industrial relations of the of financing facilities, and the ability to SIGNIFICANT ACCOUNTING POLICIES
Company during the year under review continue providing services to ensure The significant accounting policies adopted
which required disclosure under Rule 7.6 businesses continue as least impacted as when preparing these financial statements
(Vii) of the Listing Rules of the CSE. possible. and any changes thereof if applicable are
given on pages 114 to 144.
REVIEW OF BUSINESS AND MARKETS Having reviewed the outlook for each
SERVED sector and after due consideration of the STATUTORY PAYMENTS
The Company’s performance and that of range and likelihood of outcomes, the For the year under review, all known
its subsidiaries are reviewed in detail in the Directors are satisfied that the Company, its statutory payments have been made and all
other sections of this Annual Report. subsidiaries and associates have adequate retirement gratuities have been provided for.
resources to continue in operational Further, all management fees and payments
ENTERPRISE RISK MANAGEMENT existence for the foreseeable future and to related parties for the year under review
AND INTERNAL CONTROLS continue to adopt the going concern basis have been reflected in the accounts. Details
The Enterprise Risk Management Division in preparing and presenting these financial are given in note nos. 7 and 8 of pages 148
regularly reviews procedures, practices statements. and 149.
and policies and submits reports to the
Audit Committee or the Integrated Risk FINANCIAL STATEMENTS POST BALANCE SHEET EVENTS
Management Committee as appropriate. The Financial statements together with On 13th April 2020 LOLC International
Any deficiencies or weaknesses detected the Notes thereon, found on pages Private Limited a subsidiary of the Company
are discussed with the relevant operational 98 to 315 are in compliance with Sri incorporated in Singapore to facilitate
staff to ensure that the gravity of the Lanka Accounting Standards and the Company’s investments in foreign countries,
position is understood by all and to requirements of the Companies Act No. 7 received USD 422 Mn from Kookmin Bank
expedite remedial action. Decisions made of 2007. of South Korea as the first tranche for the
are followed up at subsequent Committee sale of its 70% stake in PRASAC Micro
or Board meetings. The Risk Management AUDITORS Finance Institution, Cambodia. The second
Report is on pages 85 to 88. The Auditors, M/s Ernst and Young retire, tranche for the balance USD 181 Mn was
and offer themselves for re-appointment. expected in the year 2022.
GOING CONCERN The Board recommends their re-
During the year, the Directors reviewed appointment for the year 2020/21 at a fee AMENDMENTS TO THE ARTICLES OF
the interim financials and the year-end to be decided upon by the Board. ASSOCIATION
financials. They have also regularly reviewed Pursuant to the issuance of guidelines
The fees paid to the auditors are disclosed
operations, and the environment within by the Colombo Stock Exchange due to
in the notes to the Accounts on page 151.
the COVID-19 pandemic situation of the
73
LOLC HOLDINGS PLC
country and in the interest of protecting

public health and facilitating compliance
with the Health and Safety Guidelines
issued by the Government of Sri Lanka,
your Board of Directors propose to hold
an on-line audio-visual Annual General
Meeting. Hence shareholder approval will
be sought to pass a Special Resolution to
amend the Articles of Association as set out
in the Notice of Meeting, for such purpose.
NOTICE OF MEETING
The Annual General Meeting of the
Company will be held on 27th November
2020 at 10.30 a.m. as an on-line audio-
visual meeting with arrangements for
the on-line meeting platform made at
the registered office of the Company at
No.100/1, Sri Jayawardenapura Mawatha,
Rajagiriya,.
On behalf of the board of Directors

LOLC Holdings PLC
Ishara Nanayakkara
Deputy Chairman
Kapila Jayawardene
Managing Director/Group CEO
30th October 2020
74
LOLC HOLDINGS PLC
Report of the Audit Committee
COMPOSITION conformity with the Sri Lanka Accounting their insights on regulatory and compliance
The Audit Committee comprises the Standards, the Sri Lanka Financial Reporting requirements and control or procedural
following Directors: Standards, the Companies Act No.7 of weaknesses if any.
2007, Sri Lanka Accounting & Auditing
• Deshamanya M D D Pieris - In accordance with good governance
Standards Monitoring Board Act no.15 of
Committee Chairman (Independent Non- initiatives, audit partner rotation is practiced
1995, rules and regulations of CSE and SEC
executive Director) and the need for auditor rotation is
. The Committee obtained a confirmation
• Dr R A Fernando - (Independent Non- from the management that the Company is considered every 7 years .
executive Director) in compliance with applicable accounting
• F K C P N Dias - (Non-executive The Committee has reviewed and
standards and other regulatory requirements.
Director - appointed to the Board and recommended to the Board the fees to be
Audit Committee on 4th September The Committee, reviewed the circulars, paid to the External Auditors.
2019) directions and guidelines issued by the CSE
and the CA – Sri Lanka in relation to COVID Having given consideration to the
-19 pandemic and evaluated the forecast independence of the External Auditors,
ATTENDEES the Audit Committee was satisfied that
presented by the management on Liquidity,
Following officers are permanent invitees to the Auditors, M/s Ernst and Young are
Profitability and the continuity of the business
Audit Committee Meeting; independent. This determination was based
operations of the Company and its Group.
• Managing Director on the following:
• Executive Director The Committee reviewed the Company’s a period of service - Ernst and Young were
• Chief Finance Officer interim and annual financial statements appointed Auditors, with shareholder
• Chief Risk Officer prior to submission to the Board and approval, in June, 2008 and Audit partner
• Chief Human Resources Officer recommended its release to shareholders. was changed on 31st March 2016;
• Chief Information Officer The External Auditor’s Management b other services provided by the External
• Head of Information Security & Letter including key audit matters and Auditors to the group is reviewed to
Compliance Management’s responses thereto were also ensure independence as Auditors has not
reviewed. been compromised.
The Committee is governed by its Board
approved Terms of Reference. One of its c fees and services - neither the fees paid
The Committee also reviewed internal
key functions is to assist the Board with nor the non-audit services rendered
audit reports submitted by the Enterprise
oversight of the financial reporting system of are of sufficient quantum to impair their
Risk Management Division. These reports
the Company, and of the Group of which it independence.
cover operational issues, processes and
is the ultimate holding company. To facilitate controls, including IT issues. Relevant Senior Accordingly, the Audit Committee has
carrying out this role, the Committee reviews Management officers are invited to attend recommended to the Board of Directors that
the internal processes and procedures, the meetings at which any above issue Messrs Ernst and Young be reappointed
verifies that controls are adequate and is discussed, so that the identified risk or as Auditors for the financial year ending
appropriate and seeks confirmation that control weakness and its mitigation can be 31st March, 2021. The reappointment of
the compilation and reporting of financial discussed and agreed on in a manner that is the Audit Firm and the authorising of the
information is comprehensive, accurate and meaningful, relevant and has the commitment Board to negotiate its fee will be subject
within prescribed timelines. The Committee of the management. The Committee ensured to the approval of the shareholders at the
Charter is periodically reviewed and revised that the internal audit function is independent Annual General Meeting to be held on 27th
to ensure that new developments relating of the activities it audits and that it is November, 2020.
to the function of the Committee and the performed with impartiality, proficiency and
Internal Audit process are adopted and due professional care. The Committee met four times during the
practiced. The last review was carried out in financial year 2019/20.
February 2019. Minutes of the Meetings of the Audit
Committee are tabled at the meetings of the
The Committee has discharged its duties Board. This facilitates a flow of information to
during 2019/20 within the scope of the the Board, and enables further discussion, if
charter as stated below. During the year thought necessary on any issue or proposed
the Committee assisted the Board of solution. Deshamanya M D D Peiris
Directors to discharge its responsibility for
Chairman - Audit Committee
the preparation of the quarterly and annual The External Auditors were invited for all
Financial Statements to reflect true and its quarterly meetings, which enabled the
Committee to hear their views, and discuss 30th October 2020
fair view of the affairs of the Company in
75
LOLC HOLDINGS PLC
Report of the Talent Development
and Remuneration Committee
The Talent Development and Remuneration The Committee met four times during the
Committee comprises the following year under review. The activities and views
Independent Directors: of the Committee have been communicated
to the Board of Directors quarterly through
• Dr R A Fernando Committee Chairman/ verbal briefings, and by tabling the minutes
(Independent Director) of the Committee’s meetings.
• Deshamanya M D D Pieris
Following officers are permanent invitees to

its committee meetings:
• The Group Managing Director/CEO Dr R A Fernando

Chairman - Talent Development and
• Chief Human Resources Officer Remuneration Committee
• Senior Manager Human Resources
30th October 2020
The Committee is governed by a Policy
which has vested it with powers to
evaluate, assess and recommend to the
Board for approval any fee, remuneration
and ex gratia to be paid out to its directors
including the Chief Executive Officer
based on: the need of the Company
to be competitive; the need to attract,
motivate and retain talent; and the need
to encourage and reward high levels of
performance and achievement of corporate
goals and objectives.
The composition and scope of the

Committee meets the requirements set out
in the Listing Rules of the Colombo Stock
Exchange.
During the year under review the

Committee focused on the following areas:
• Training and development of the key

corporate players and international staff
cadres under its international ventures ;
• Business Model for Board Leadership

in the 21st Century patented by Dr R A
Fernando;
• Positioning of the Group as an

International Employer;
• Adoption of sustainable HR policies

(sustainable transportation and homes
for employees).
76
LOLC HOLDINGS PLC
Report of the Related Party Transaction
Review Committee
The Related Party Transaction Review review of the Committee reflecting all
Committee comprises the following related party transactions including
Members: expenses, income, lending and amounts
outstanding.
• Deshamanya M D D Pieris -
Committee Chairman (Independent When reviewing facilities the Committee
Director) also considers the level of approval,
reporting and disclosure requirements
• W D K Jayawardena (Group Managing of all recurrent and non recurrent related
Director/CEO) party transactions in consultation with
the Group Chief Financial Officer and the
• F K C P N Dias (Non-Executive Director)
Deputy General Manager – Compliance
Following officers are permanent invitees to to determine whether the transactions
its meetings have been carried out in conformance with
the requirements of the aforesaid Section
• Chief Financial Officer 9 of the Listing Rules and the Sri Lanka
Accounting Standards.
• Deputy General Manager - Compliance
Reviewing and approval of RPTs are either
The Committee has adopted the Code at its quarterly meetings with a majority of
of Best Practice on Related Party the members present to form a quorum or
Transactions of the Securities and by circulation consented to by a majority.
Exchange Commission of Sri Lanka as Where a member of the Board has an
its Terms of Reference. In conformance interest in the proposed transaction, he/she
of the Code, policies and procedures will refrain from participating in the decision.
have been established to ensure that
such transactions are consistent with the A declaration by the Board of Directors as
Code and Section 9 of Listing Rules of the an affirmative statement of the Compliance
Colombo Stock Exchange. with the Listing Rules pertaining to related
party transactions is given on page 72 of
As a policy the Committee has set a this report.
threshold for facilities that must be
reviewed by it prior to Board approval. The Committee met four times during the
When reviewing such RPT facilities the year under review. The activities and views
Committee considers the nature of the of the Committee have been communicated
transaction, terms, conditions, value and to the Board of Directors quarterly through
monitors if such transactions will be carried verbal briefings, and by tabling the minutes
out on normal commercial terms while of the Committee’s meetings.
maintaining fairness and transparency.
Where necessary the Committee will
obtain professional and expert advice from
qualified persons to assess proposed
related party transactions.
Deshamanya M D D Pieris
The Committee meets quarterly to review
Chairman - Related Party Transactions
all recurrent and non recurrent RPTs of the
Review Committee
Company. The Company has implemented
a system that enables the Company to
capture and retrieve data on RPTs. This 30th October 2020
system generates comprehensive reports
for management review and for quarterly
77
LOLC HOLDINGS PLC
Report of the Integrated
Risk Management Committee
The Committee comprises the following and ensure that the board of directors is
Members: continuously informed of the group’s risk
exposures and risk indicators.
Deshamanya M D D Pieris - Committee
Chairman/Independent Director Risks monitored by Business Unit/Sector
heads were reported to the Chief Risk
W D K Jayewardene - Chief Executive
Officer, to perform an independent and
Officer/Group Managing Director
selective scrutiny of relevant matters and
the Chief Risk Officer issues. These risks were then reviewed
and summarised reports were submitted
the Chief Financial Officer
to the Committee for concurrence and/
the Chief Credit Officer or specific directions in order to ensure
that the risks were managed appropriately.
the GM Treasury
The reviews were wide ranging and take
the CEO Recoveries into consideration both micro and macro
environments, and both local and global
the Chief Information Officer
trends and implications. Mitigation methods
the Head of IT Security and Compliance were discussed to ensure that a healthy
balance is achieved between risk mitigation
the Chief Legal Officer
and operational efficiency.
the Chief Human Resources Officer
The Committee met once during the year.
The following attend by invitation: Minutes of this meeting were tabled at a
Mrs K U Amarasinghe - Executive Director Board Meeting, thereby enabling the Board
as a whole to be kept informed.
This Committee was first set up when the
Company was engaged in leasing and was
licensed by the Central Bank of Sri Lanka.
While this is no longer a requirement, the
Committee is being retained voluntarily by
the Board which believes that this sub-
Deshamanya M D D Pieris
committee has an important role to play in
Chairman - Integrated Risk Management
ensuring compliance and contributing to
Committee
good governance.
The primary responsibility of the Committee 30th October 2020

is to assist the board of directors in
understanding and exercising regular
oversight on risk identification and
management, adopted by the management
in operating the Group’s business sectors:
to ensure that each sector has overall risk
guidelines and risk management procedures
which are monitored regularly; to review
management’s assessment of all risk
types, including but not limited to credit,
market, liquidity, operational, Information
and communication technology related risk
and strategic risks through appropriate risk
indicators and management information;
review the risk under stress scenarios
and the capacity to withstand such risks;
78
LOLC HOLDINGS PLC
Report of the Corporate Governance
Committee
The Committee comprises the following: The Committee met once during the year.
Minutes of this meeting were tabled at the
Deshamanya M D D Pieris - Committee next Board Meeting, thereby enabling the
Chairman) Board as a whole to be kept informed.
W D K Jayawardena
Mrs K U Amarasinghe
This Committee is not a statutory

committee, but was established in
2007 as part of a stated intention to Deshamanya M D D Pieris
strengthen corporate governance. While Chairman - Corporate Governance
complying with statutory and regulatory Committee
requirements, the Policy in place mandates
the Committee to adopt best practices 30th October 2020
in ensuring that the Company maintains
highest standard of ethics while building
value for all stakeholders.
To this end, a pre-approved agenda has

been agreed on, which ensures that the
following matters are discussed:
• Review of Compliance with applicable

laws on corporate governance and
regulatory guidelines.
• Review of the Company’s activities

and stand on significant Corporate
Sustainability and Public Policy issues
that impact its employees, investors,
customers and communities.
• Evaluation of possible Conflicts of

Interest of Board Members and of Senior
Management and recommendations for
the Board.
While also broadly reviewing related

issues impacting Group entities, detailed
discussion and implementation of
necessary strategies takes place during the
Audit and Risk Management Committee
meetings.
79
LOLC HOLDINGS PLC
Corporate Governance Report
Given below is the level of compliance against the respective governance requirements;
Section No. Listing Rules of the Colombo Stock Exchange Level of compliance
7.10 Corporate Governance

7.10 Statement confirming that as at the date of the annual report The Company is in compliance with the listing rules of the
the Company is in compliance with these rules. Colombo Stock Exchange, as explained below.
7.10.1 Non-executive Directors
a. The Board of Directors of a listed entity shall include at Three of the six Directors are Non-Executive Directors.
least:
- two non-executive directors; or

The names of the non-executive directors are set out in the
- such number of non-executive directors equivalent to Report of the Directors on page 71.
one third of the total number of directors whichever is
higher.
7.10.2 Independent Directors
a. Where the constitution of the Board of Directors includes Of the three non executive Directors, two (1/3 of the Board)
only two non-executive directors in terms of 7.10.1, both are Independent Directors.
such non-executive directors shall be ‘independent’.
In all other instances two or 1/3rd of non-executive
directors appointed to the Board, whichever is higher
shall be ‘independent’.
b. The Board shall require each non-executive director to The three Non-Executive Directors have submitted their
submit a signed and dated declaration annually of his/ declarations of independence/non independence for the
her independence or non-independence against the financial year ended 31/3/2020.
specified criteria.
7.10.3 Directors disclosures Deshamanya M D D Pieris and Dr. R A Fernando have
declared their status as independent directors.
a. The Board shall make a determination annually as to the
independence or non-independence of each director The Board has determined that by virtue of their
based on such declaration and other information professionalism, skill and expertise, these two directors are
available to the board and shall set out in the annual independent.
report the names of directors determined to be
‘independent’.
b. In the event a director does not qualify as ‘independent’ Deshamanya M D D Pieris and Dr. R A Fernando have
against any of the criteria set out below but if the board, served as Directors for over 9 years.
taking account all the circumstances, is of the opinion
However, they meet all the other criteria of independent
that the director is nevertheless ‘independent’, the board
directors.
shall specify the criteria not met and the basis of its
determination in the annual report.
c. In addition to disclosures relating to the independence The profiles of the Directors can be found on pages 20 to
of a director set out above, the board shall publish in 23.
its annual report a brief resume of each director on its
board which includes information on the nature of his/her
expertise in relevant functional areas.
d. Upon appointment of a new director to its board, the The Company complies with this requirement, in the event a
Entity shall forthwith provide to the Exchange a brief new director is appointed to the Board.
resume of such director for dissemination to the public.
The appointment of Mr F K C P N Dias was announced the
Such resume shall include information on the matters
Exchange on 04.09.2019 including the requirements set out
itemised in paragraphs (a), (b) and (c) above.
in this section.
80
LOLC HOLDINGS PLC
7.10.5 Remuneration Committee

a. Composition
The remuneration committee shall comprise; The Talent Development and Remuneration Committee
- of a minimum of two independent non-executive comprises two non-executive independent directors, one of
directors (in instances where an Entity has only two whom is the Committee Chairman.
directors on its Board);
or
- of non-executive directors a majority of whom shall be

independent, whichever shall be higher.
- One non-executive shall be appointed as Chairman of

the committee by the board of directors.
b. Functions
The Remuneration Committee shall recommend the The Committee periodically reviews Board remuneration and
remuneration payable to the executive directors and makes recommendations to the Board.
Chief Executive Officer of the Listed Entity and/or
The Committee report is on page 76.
equivalent position thereof, to the board of the Listed
Entity which will make the final determination upon
consideration of such recommendations.
c. Disclosure in the Annual Report
The annual report should set out the names of directors The Committee comprises the Independent Directors
(or persons in the parent company’s committee in the Deshamanya M D D Pieris and Dr. R A Fernando.
case of a group company) comprising the remuneration The Committee is also guided by the Board approved
committee, contain a statement of the remuneration Remuneration Policy.
policy and set out the aggregate remuneration paid to
The aggregate remuneration paid to executive and non-
executive and non-executive directors.
executive directors is disclosed in the notes to the financials.
7.10.6 Audit Committee
a. Composition
The audit committee shall comprise; The Committee comprises three non-executive Directors,
two of whom are independent. The Committee is chaired by
- of a minimum of two independent non-executive
one independent director.
directors (in instances where the Entity has only two
directors on its board);
or
- of non-executive directors a majority of whom shall be

independent, whichever shall be higher.
- One non-executive shall be appointed as Chairman of

the committee by the board of directors.
- The Chairman or one member of the committee Non-executive director. Mr. F K C P N Dias is a member of a
should be a Member of a recognised professional recognised professional accounting body.
accounting body.
81
LOLC HOLDINGS PLC
b. Functions
Shall include, The Committee is guided by a board approved Audit

Committee Charter which includes the functions of those
(i) Overseeing of the preparation, presentation and
listed here.
adequacy of disclosures in the financial statements
of a Listed Entity, in accordance with Sri Lanka
Accounting Standards.
(ii) Overseeing of the Entity’s compliance with financial

reporting requirements, information requirements
of the Companies Act and other relevant financial
reporting related regulations and requirements.
(iii) Overseeing the processes to ensure that the Entity’s

internal controls and risk management are adequate,
to meet the requirements of the Sri Lanka Auditing
Standards.
(iv) Assessment of the independence and performance

of the Entity’s external auditors.
(v) To make recommendations to the board pertaining

to appointment, re-appointment and removal of
external auditors and to approve the remuneration
and terms of engagement of the external auditors.
c. Disclosure in the Annual Report The Committee comprises the Independent Directors
Deshamanya M D D Pieris (Committee Chairman) Dr. R A
The names of the directors (or persons in the parent
Fernando and Non-executive Director Mr. F K C P N Dias.
company’s committee in the case of a group company)
comprising the audit committee should be disclosed in
the annual report.
The Committee has made this determination. Please refer
The committee shall make a determination of the the Committee report on page 75.
independence of the auditors and shall disclose the basis
for such determination in the annual report.
The annual report shall contain a report by the audit

committee, setting out the manner of compliance by the
Entity in relation to the above, during the period to which
the annual report relates.
82
LOLC HOLDINGS PLC
Board and Board Sub Committees Composition

Name of Director Executive Non- Independent Non- Board Audit Talent Related Party Integrated Corporate
Executive independent Committee Development Transaction Risk Governance
and Remuneration Review Management Committee
Committee Committee Committee
Mr. I C Nanayakkara √ √
Mr. W D K Jayawardena √ √ √ √ √
Mrs. K U Amarasinghe √ √ √
Mr. F K C P N Dias √ √ √ √ √
(a.w.e.f. 04/09/2019)
Deshamanya M.D.D.Peiris √ √ √ √* √ √* √* √*
Dr. R A Fernando √ √ √ √ √*
* Committee Chairman
Board Meeting Attendance
Name of Director 31.05.2019 15.08.2019 15.11.2019 14.02.2020
Mr. I.C.Nanayakkara √ √ - √
Deputy Chairman
Mr. W D K Jayawardena √ √ √ √
Managing Director/Group CEO
Mrs. K U Amarasinghe √ √ √ √
Mr. F K C P N Dias (a.w.e.f. 04/09/2019) √ √
Deshamanya M D D Pieris √ √ √ √
Dr. R A Fernando - √ √ -
Audit Committee Meeting Attendance
Name of Director 31.05.2019 15.08.2019 15.11.2019 14.02.2020
Committee Chairman
Dr. R A Fernando - √ √ -
Mr. F K C P N Dias √ √
(a.w.e.f. 04/09/2019)
83
LOLC HOLDINGS PLC
Talent Development and Remuneration Committee Attendance

Name of Director 22.04.2019 26.07.2019 17.10.2019 11.02.2019
Dr. R A Fernando √ √ √ √
Committee Chairman
Deshamanya M D D Peiris √ √ √ √
Related Party Transaction Review Committee Meeting Attendance

Name of Director 31.05.2019 15.08.2019 15.11.2019 14.02.2020
Committee Chairman
Mr. W D K Jayawardena √ √ √ √
Mrs. K U Amarasinghe √ √ √
(stepped down w.e.f. 14/02/2020)
Mr. F K C P N Dias √
(a.w.e.f. 14/02/2020)
Integrated Risk Management Committee Meeting Attendance

Name of Director 11.09.2019
Deshamanya M D D Pieris √
Committee Chairman
Mr. W D K Jayawardena √
Corporate Governance Committee Meeting Attendance

Name of Director 11.09.2019
Deshamanya M D D Pieris √
Committee Chairman
Mr. W D K Jayawardena √
Mrs. K U Amarasinghe √
84
LOLC HOLDINGS PLC
Enterprise Risk Management
LOLC Holdings PLC (LOLC ) is a diversified conglomerate consisting of companies which are incorporated overseas as well as in Sri Lanka.
Operation of these entities span different sectors with core competency in financial sector. Overseas operations mainly consists of Finance,
Plantation and Leisure sectors while the local operations are more diversified and consists of Finance, Insurance, Leisure, Plantation,
Manufacturing, Construction and Renewable energy and FMCG ( Fast moving consumer goods ). The exposures to different economies
and sectors with its unique regulatory, business & organisation cultures require a unique risk governance framework which is adoptable
and practical. In addition to different regulatory structures & legal jurisdictions, it creates a challenging environment for group level risk
management. Therefore, the high-level risk governance structures adopt an investment risk centered view for all overseas operations while
the domestics operations are viewed based on significance/impact to holding company performance. The domestic operations are further
segregated in to industrial sectors they are operating and significant operations are viewed from a tactical level risk governance angle while
the less significant operations are again looked at from a strategic investment angle. The below depicted Risk Governance Structure is
adopted covering companies which LOLC holdings PLC has a direct controlling interest.
LOLC
Holdings Risk
Governance
Structures
Strategic Operational
Investment View Level View
Domestic Sector Level Risk

Foreign Investments (Low Management
Investments (All) materiality to Group
Performance
Regulated Other Significant

Sectors sectors
Finance Sector Plantations Sector
Insurance Sector Leisure Sector
Manufacturing Sector
85
LOLC HOLDINGS PLC
The domestic regulated sectors have Enterprise Risk Management (ERM) at of management on the reliability of risk
to comply with specific risk governance LOLC group is an independent function and audit functions of the group. At LOLC
directives issued by the respective spearheaded by the board of management group Enterprise Risk Management (ERM)
regulators while sectors /entities are driven via the integrated risk management consists of the Risk Management, Audit
by business and corporate governance committee (IRMC) and the audit committee. and Information Systems Audit functions.
requirements and standards. Therefore in This independent reporting lines of ERM This collaboration extracts the synergies
addition to the group level risk management function sans any executive management between Risk and Audit functions and
structures the regulated sectors have their interference ensures uninfluenced and ensure that the risks are identified on time
own risk management structures at entity/ un-bias reporting of all risk related and and the mitigation action too is reviewed
company level while the other sectors have audit related matters to the board of for the adequacy, reliability and consistency
its risk management structures at sector management. This operational structure ensuring that the internal control systems /
level except the plantation sector which has is adopted at organisational level as well risk mitigation mechanisms are functioning
company level risk management structures. as sector level. In entities where there is as intended.
The entity level structures are operationally no separate integrated risk management
independent while the other sector level risk committee the risk related functions are
management structures are managed at the handled by the audit committee. The
(Holding company Level.) While catering to operational level risk & audit functions are
the specific requirements of the regulated managed by the risk officers appointed
industries relevant Risk indicator level for each sector or entity as relevant.
information flow is facilitated with the group This structure is uniform across all
risk management for periodic evaluation group companies and it ensures that
of the group level risk stemming from the the processes adopted too are uniform
sector exposures. which in turn gives comfort to the Board
Board of Management
Audit Committee Intergrated Risk

Management Committee
Internal Audit Information Risk

Systems Audit Management
86
LOLC HOLDINGS PLC
The above risk governance structure is replicated for all sectors and entities as required and appropriate including the holding company
level.
RISK MANAGEMENT PROCESS
Risk
Identification
Risk and
Risk Review
impact
and monitoring
assessment
Risk
Risk
Mitigation
Communication
action
Risk identification is a multilayer process the entities with significant impact to the FUTURE
which includes self-assessments by group have adequate internal controls and Enterprise Risk Management at LOLC
risk/process owners, reviews by risk Process controls at LOLC holding PLC revolves around “ Building an organisational
management function and risks identified level are functioning reliably. In addition Culture where Protection, Assurance,
by internal /IS audit in their reviews. The all regulated entities within the group and Reliability, Accountability, Transparency
group level risk assessment focuses on identified sectors have their own dedicated and Confidentiality are treasured and
risks which has an impact at group level internal audit units and regularly report to lasting values”, which is our vision in risk
due to operations of LOLC entities in respective Audit committees. management and we strive to inculcate the
identified & predefined sectors and are controlled culture among employees by way
reported to the Integrated risk management The corporate whistle blower hotlines and a
of constant and continues engagements
committee along with the proposed risk customer feedback hot line are operated by
via training and awareness sessions. This
mitigation controls/ actions. The integrated ERM in all entities where operational units
empowers employees to identify risks and
risk management committee in consultation of ERM are located. All information received
initiate appropriate risk response in a timely
with the risk owners decide on the action via these lines are treated confidentially
manner. This continuous engagement of
plans for the effective mitigation of risks and are resolved. This provides a platform
Enterprise Risk Management department
identified. The identified risks are monitored, for both employees and customers to give
with other stake holders in consultative
and adverse movement of risk indicators feedback on exceptions or any irregularities
capacity and in trainings ensures
are periodically reported to the IRMC for observed. All internal audit units of the
formulation of adequately controlled
necessary action. group work on an annual audit cycle and
processes, products and service offerings
progress is monitored by the respective
where risks are managed at acceptable
INTERNAL AUDIT audit committees. IS audit conducts
levels.
The internal audit reviews the effectiveness reviews on information systems and related
of the risk mitigation strategies and internal functions and engages with other auditors The COVID - 19 pandemic at the latter
control framework. Reviews are conducted for necessary consultation and reviews. part of the year under review impacted all
to have a reasonable assurance that sectors. Although most sectors show some
87
LOLC HOLDINGS PLC
resilience and shows signs of recovery, the A diversified conglomerate like the LOLC RISK PROFILE
Leisure sector impact globally is very high group requires the risk management The following is based on the perceived risk
and yet to show signs of revival and the full initiatives to have the capability to identify at holding company level .It is a high level
impact will be felt next year in all sectors. and respond to risks in a timely manner categorisation of risks used only for the
Despite the setbacks which is a global and we firmly believe that updating and illustration purposes of this report.
systemic issue it highlighted the importance maintaining a diverse skills and knowledge
of the risk management practices as profile covering all sectors is a pre-requisite Risk Levels Risk Score
organisations with sound risk management of an effective risk management strategy. Very High 5
practices were more stable and quick to Therefore, continuous training both internal
High 4
recover . This make us more determined and external are provided to enhance the
to improve and strengthen our practices to knowledge and skills of the ERM staff. Medium 3
ensure smooth operations during turbulent This enhance the confidence levels and Low 2
times. our ability to identify emerging risks and Very Low 1
respond adequately.
Financial Risks Operational Risks
Business
Asset & Liability Risk Strategy Risk
5 Profitability & 5
Currency Risk 4 Income 4
3 Structure Risk 3
2 2
1 1
0 Capital Mismanagement 0 Internal Systems
Market Risk & Fraud Risk & Operational
Adequacy Risk
Risk
Interest Rate Risk Credit Risk
Liquidity Risk Technology Risk
Business Risks Event Risk
Legal Risk Political Risk

5 5
4 4
Industry Risk 3 3
Policy Risk
2 2
1 1
0 0
Exogenous Risk Contagion Risk
Image Risk Financial

Infrastructure Risk
Systemic Disaster Management &

Risk Business Continuity Risk
88
LOLC HOLDINGS PLC
FINANCIAL STATEMENTS
Financial Calendar 90
Chief Executive Officer’s and Chief Financial Officer’s
Responsibility Statement 91
Directors’ Responsibility for Financial Reporting 92
Independent Auditors’ Report 93
Statement of Financial Position 98
Statement of Profit or Loss 100
Statement of Comprehensive Income 101
Statement of Changes in Equity 102
Statement of Cash Flow 112
Notes to the Financial Statements 114
89
LOLC HOLDINGS PLC
Financial Calendar
1st Quarter Results 2019/2020 released on 15th August 2019

2nd Quarter Results 2019/2020 released on 15th November 2019
3rd Quarter Results 2019/2020 released on 14th February 2020
4th Quarter Results 2019/2020 released on 10th August 2020
Annual Report for 2019/2020 released in November 2020
41st Annual General Meeting in November 2020
PROPOSED FINANCIAL CALENDAR 2019/20

1st Quarter Results 2020/2021 released on 26th August 2020
2nd Quarter Results 2020/2021 will be released on 13th November 2020
3rd Quarter Results 2020/2021 will be released on 15th February 2021
4th Quarter Results 2020/2021 will be released on 31st May 2021
Annual Report for 2020/2021 will be released in August 2021
42nd Annual General Meeting in September 2021
90
LOLC HOLDINGS PLC
Chief Executive Officer’s and Chief Financial
Officer’s Responsibility Statement
The Financial Statements are prepared in compliance with the Sri The Financial Statements were audited by Ernst & Young,
Lanka Accounting Standards issued by The Institute of Chartered Chartered Accountants, the Company’s External Auditors. The
Accountants of Sri Lanka and the requirements of the Companies Audit Committee of your Company meets periodically with the
Act No. 07 of 2007 and any other applicable statutes to the extent Internal Auditors and the External Auditors to review the manner
applicable to the Company. in which these auditors are performing their responsibilities and
to discuss auditing, internal control and financial reporting issues.
All the significant accounting policies adopted by the Company To ensure complete independence, the External Auditors and the
and Group are mentioned in the Notes to the Financial Internal Auditors have full and free access to the members of the
Statements. There have been no changes in the accounting Audit Committee to discuss any matter of substance.
policies adopted by the Group during the year under review except
for SLFRS 16 Leases standard adopted with effect from 1 April It is also declared and confirmed that the Company has complied
2019. For all periods up to and including the year ended 31 March with and ensured compliance by the Auditor with the guidelines
2020, the Group prepared its financial statements in accordance for the audit of listed companies where mandatory compliance is
with Sri Lanka Accounting Standards SLFRS/LKAS) which have required. It is further confirmed that all the other guidelines have
materially converged with the International Financial Reporting been complied with.
Standards (IFRS) as issued by the International Accounting
Standards Board (IASB).
There are no departures from the prescribed accounting standards

in their adoption. The accounting policies used in the preparation Mr. Kapila Jayawardena
of the Financial Statements are appropriate and are consistently Group Managing Director/CEO
applied.
The Board of Directors and the management of your Company

accept responsibility for the integrity and objectivity of these
Financial Statements. The estimates and judgements relating to
the Financial Statements were made on a prudent and reasonable Mrs. Sunjeevani Kotakadeniya
basis, in order that the Financial Statements reflect in a true Chief Financial Officer - LOLC Group
and fair manner, the form and substance of transactions and
30th October 2020
reasonably present the Company’s state of affairs. To ensure
this, the Company has taken proper and sufficient care in
installing a system of internal controls 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 recognised in weighing the assurances provided by any
system of internal controls and accounting.
91
LOLC HOLDINGS PLC
Directors’ Responsibility for
Financial Reporting
The Directors confirm that the Company’s Financial Statements

for the year ended 31 March 2020 are prepared and presented
in conformity with the requirements of the Sri Lanka Accounting
Standards, the Regulations and Directions of the Central Bank of
Sri Lanka, the Listing Rules of the Colombo Stock Exchange, the
Finance Leasing Act No. 56 of 2000 and the Companies Act No.
07 of 2007.
They believe that the Financial Statements present a true and fair
view of the state of the affairs of the Company and of the Group as
at the end of the financial year.
The Directors also accept responsibility for the integrity and

accuracy of the Financial Statements presented and confirm that
appropriate accounting policies have been selected and applied
consistently and reasonable and prudent judgement has been
exercised so as to accurately report transactions.
The Directors have taken reasonable steps to safeguard the

assets of the Company, to prevent, deter and detect fraud, and to
ensure the integrity, accuracy and safeguarding of operational and
financial records.
The Directors confirm that to the best of their knowledge, all

statutory payments due in respect of the Company and its
subsidiaries as at the Balance Sheet date have been paid for, or
where relevant, provided for.
The Directors believe that the Company is in a position to continue

its operations in the foreseeable future. Accordingly, the Financial
Statements are prepared on the basis that the Company is a going
concern.
The External Auditors, Ernst & Young, were provided with the
opportunity to make appropriate inspections of financial records,
minutes and other documents to enable them to form an opinion
of the Financial Statements. The Independent Auditor’s Report is
set out on page 93.
Mr. Kapila Jayawardena

Group Managing Director/CEO
30th October 2020
92
LOLC HOLDINGS PLC
Independent Auditor’s Report
Report on the audit of the financial Basis for opinion of our audit of the financial statements
statements We conducted our audit in accordance as a whole, and in forming our opinion
Opinion with Sri Lanka Auditing Standards thereon, and we do not provide a separate
We have audited the financial statements (SLAuSs). Our responsibilities under those opinion on these matters. For each matter
of LOLC Holdings PLC (“the Company”) standards are further described in the below, our description of how our audit
and the consolidated financial statements Auditor’s responsibilities for the audit of addressed the matter is provided in that
of the Company and its subsidiaries the financial statements section of our context.
(“the Group”), which comprise the report. We are independent of the Group
We have fulfilled the responsibilities
statement of financial position as at 31 in accordance with the Code of Ethics
March 2020, and the statement of profit described in the Auditor’s responsibilities
issued by CA Sri Lanka (Code of Ethics)
or loss, statement of comprehensive for the audit of the financial statements
and we have fulfilled our other ethical
income, statement of changes in equity section of our report, including in relation
responsibilities in accordance with the
and statement of cash flows for the year to these matters. Accordingly, our audit
Code of Ethics. We believe that the audit
then ended, and notes to the financial included the performance of procedures
evidence we have obtained is sufficient
statements, including a summary of designed to respond to our assessment
and appropriate to provide a basis for our
significant accounting policies. of the risks of material misstatement
opinion.
of the financial statements. The results
In our opinion, the accompanying financial
Key audit matters of our audit procedures, including the
statements of the Company and the
procedures performed to address the
Group give a true and fair view of the Key audit matters are those matters that,
matters below, provide the basis for
financial position of the Company and the in our professional judgment, were of most
our audit opinion on the accompanying
Group as at 31 March 2020, and of their significance in our audit of the financial
financial performance and cash flows for financial statements.
statements of the current period. These
the year then ended in accordance with matters were addressed in the context
Sri Lanka Accounting Standards.
Key Audit Matter How our audit addressed the key audit matter
Impairment allowance for advances and Our audit procedures (among others) were designed to obtain sufficient and
other loans and finance lease receivables, appropriate audit evidences, to assess the reasonableness of the impairment
hire purchases and operating leases: allowance and included the following.
We considered the impairment allowance for • We evaluated the design effectiveness of key internal controls over estimation
advances and other loans and finance lease of impairment allowance advances and other loans and finance lease
receivables, hire purchase and operating leases receivables, hire purchases and operating leases which included assessing
as a key audit matter. the level of oversight, review and approval of impairment policies by the Board
Audit Committee and management.
• We test-checked the underlying calculations and data used in such
calculations.
• We involved the component auditors of the subsidiary companies to perform
the audit procedures to assess the reasonableness of the assumptions
and test the controls on sample basis over the process of estimating the
impairment allowance.
• In addition to the above, following focused procedures were performed:
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LOLC HOLDINGS PLC
Significant judgments and assumptions were used For those individually assessed for impairment:
by the management to determine the impairment
– We assessed the main criteria used by the management for determining
allowance and complex calculations were
whether an impairment event had occurred;
involved in its estimation. Also, probable impacts
of COVID -19 outbreak on the economically – Where impairment indicators existed, we assessed the reasonableness of
impacted customers and related government management’s estimated future recoveries including the expected future
relief measures on the key assumptions, the cash flows, discount rates and the valuation of collateral held:
higher level of estimation uncertainty involved, and – We compared the actual recoveries against previously estimated amounts
materiality of the amounts reported in the Group’s of future recoveries;
financial statements, underpinned our basis for
– We also assessed the impact of overarching economic condition in Sri
considering it as a Key Audit Matter.
Lanka and government relief package on future cash flows.
As at 31 March 2020, 29% of total assets of the
For those collectively assessed for impairment:
Group consisted of advances and other loans
and finance lease receivables, hire purchase and – We tested the completeness of the underlying information used in the
operating leases, net of impairment allowance impairment calculations by agreeing details to the source documents and
amounting to LKR. 389,460 Mn (Note 20 and 21). information in IT systems;
The Note 3.4.3 of the financial statements – We also considered the reasonableness of macro-economic factors
describes the basis of impairment allowance used by comparing them with publicly available data and information
and assumptions used by the management in its sources. Our considerations included assessing the appropriateness of the
calculation. weightages assigned to possible economic scenarios;
– We also assessed the management application of temporary practical
expedients issued by CA Sri Lanka in relation to ECL computation.
We assessed the adequacy of the related financial statement disclosures as set
out in notes 3.4.3,9,20 and 21 of the financial statements.
Valuation of land and buildings: Our audit procedures included the following;
As at 31 March 2020, Land and Buildings are • We read the professional valuer’s report and understood the key estimates
carried at fair value, classified as Property, Plant made and the approach taken by the valuer in determining the valuation of
& Equipment and Investment Property amounted each property.
to LKR. 34,701 Mn and LKR. 31,723 Mn
• We also assessed the qualifications and expertise of the valuers and reviewed
respectively and the fair value gain recognised in
the terms of their engagement with the Group to determine whether there
Other Comprehensive Income and Profit or Loss
were any matters that might have affected their objectivity or may have
amounted to LKR. 1,129 Mn and LKR. 3,915 Mn
imposed scope limitations upon their work.
respectively.
• We involved our internal specialised resources to review the valuation reports
The fair value of such property was determined
for the selected properties and assessed whether the valuation approach and
by external valuers engaged by the Group. The
methods used are in accordance with the established standards for valuation
valuation of land and buildings was significant
of the properties and suitable for use in determining the fair value for the
to our audit due to the use of significant
purpose of assessment of fair value gain/loss and disclosure of fair value in
assumptions disclosed in notes 28 and 35 to the
the financial statements.
financial statements.
94
LOLC HOLDINGS PLC
• Our internal specialised resources also assessed the assumptions used by
the third-party valuers in the valuation process.
the audit procedures to assess the reasonableness of the assumptions used
on sample basis over valuation of land and buildings.
• We also assessed the adequacy of the disclosures included in the financial
statements regarding the key assumptions which have the highest effect in
the determination of the fair value of properties as disclosed in notes 28 and
35.
Management’s assessment of possible Our audit procedures included the following;
effects of COVID 19 outbreak on the nature
• We gained an understanding of Management’s assessment of the possible
and extent of risks arising from financial
impacts of the COVID-19 outbreak on the nature and extent of risks arising
instruments and related disclosures:
from financial instruments and developing related disclosures of the Group.
Management has assessed the possible impacts
of the evolving COVID-19 outbreak on, nature and
the audit procedures to assess the reasonableness of the assumptions used
extent of risks arising from financial instruments
over Management’s assessment of the possible impacts of the COVID-19
and related financial statements disclosures are
outbreak.
made considering the best available information
up to the date of assessment, as more fully • We assessed the adequacy of qualitative disclosures made in 58 to the
described in Note 58 of the financial statements. financial statements focusing on credit risk and liquidity risk in the light of the
objective of SLFRS 7.
We considered such management’s assessment
and related disclosures as a key audit matter, • In relation to significant judgments and estimates underpinning such
considering nature of business, use of significant disclosures, we assessed the reasonableness of those key assumptions
management judgments and estimates considering related market information and internal decisions made by the
considering future events and circumstances. Group.
Accounting for Business Combination: Our audit procedures included the following;
During the year, the Group has acquired 66.67% • We read the purchase agreement to obtain an understanding of the
in Grey Reach Investment Limited which is the transaction and the key agreed terms.
holding Company of Sunbird Bioenergy (SL)
• We evaluated the appropriateness and adequacy of the audit procedures
Limited amounting to LKR. 5,300 Mn. The
performed by component auditors relating to the said acquisition, focusing on
transaction resulted in the Group recognising a
the following aspects;
gain on bargain purchase of LKR. 5,395 Mn as
disclosed in note 14. – Identification of the assets and liabilities acquired; and
We focused on this matter because of the – Ascertaining the fair value of acquired assets and liabilities.
significance of this gain reported in the financial – Reasonability of the significant management’s judgments and estimates.
statements and significant management’s
• We traced the information relating to acquired assets and liabilities to audited
judgments involved.
financial statements of investees.
• We assessed the adequacy of the related financial statement disclosures as
set out in notes 14 and 31.6.1 of the financial statements
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LOLC HOLDINGS PLC
Other information included in the Group or to cease operations, or has no involve collusion, forgery, intentional
Group’s 2020 Annual Report realistic alternative but to do so. omissions, misrepresentations, or the
Other information consists of the override of internal control.
Those charged with governance are
information included in the 2020 Annual
responsible for overseeing the Company’s • Obtain an understanding of internal
Report, other than the financial statements
and the Group’s financial reporting control relevant to the audit in order
and our auditor’s report thereon.
process. to design audit procedures that are
Management is responsible for the other
appropriate in the circumstances, but
information. The Group’s annual report is
Auditor’s responsibilities for the audit not for the purpose of expressing an
expected to be made available to us after
of the financial statements opinion on the effectiveness of the
the date of this auditor’s report.
Our objectives are to obtain reasonable internal controls of the Company and
Our opinion on the financial statements assurance about whether the financial the Group.
does not cover the other information and statements as a whole are free from
material misstatement, whether due to • Evaluate the appropriateness of
we do not express any form of assurance
fraud or error, and to issue an auditor’s accounting policies used and the
conclusion thereon.
report that includes our opinion. reasonableness of accounting
In connection with our audit of the financial Reasonable assurance is a high level estimates and related disclosures
statements, our responsibility is to read of assurance but is not a guarantee made by management.
the other information and, in doing so, that an audit conducted in accordance
• Conclude on the appropriateness
consider whether the other information is with SLAuSs will always detect a
of management’s use of the going
materially inconsistent with the financial material misstatement when it exists.
concern basis of accounting and,
statements or our knowledge obtained Misstatements can arise from fraud or
based on the audit evidence
in the audit or otherwise appears to be error and are considered material if,
obtained, whether a material
materially misstated. individually or in the aggregate, they could
uncertainty exists related to events or
reasonably be expected to influence the
Responsibilities of management and conditions that may cast significant
economic decisions of users taken on the
those charged with governance doubt on the Group’s ability to
basis of these financial statements.
continue as a going concern. If we
Management is responsible for the
As part of an audit in accordance with conclude that a material uncertainty
preparation of financial statements that
SLAuSs, we exercise professional exists, we are required to draw
give a true and fair view in accordance
judgment and maintain professional attention in our auditor’s report to the
with Sri Lanka Accounting Standards, and
skepticism throughout the audit. We also: related disclosures in the financial
for such internal control as management
statements or, if such disclosures are
determines is necessary to enable the
• Identify and assess the risks of inadequate, to modify our opinion.
preparation of financial statements that are
material misstatement of the financial Our conclusions are based on the
free from material misstatement, whether
statements, whether due to fraud audit evidence obtained up to the
due to fraud or error.
or error, design and perform audit date of our auditor’s report. However,
In preparing the financial statements, procedures responsive to those risks, future events or conditions may cause
management is responsible for assessing and obtain audit evidence that is the Group to cease to continue as a
the Group’s ability to continue as a going sufficient and appropriate to provide going concern.
concern, disclosing, as applicable, matters a basis for our opinion. The risk of
not detecting a material misstatement • Evaluate the overall presentation,
related to going concern and using the
resulting from fraud is higher than for structure and content of the financial
going concern basis of accounting unless
one resulting from error, as fraud may statements, including the disclosures,
management either intends to liquidate the
and whether the financial statements
96
LOLC HOLDINGS PLC
represent the underlying transactions have complied with ethical requirements Report on Other Legal and Regulatory
and events in a manner that achieves in accordance with the Code of Ethics Requirements
fair presentation. regarding independence, and to As required by section 163 (2) of the
communicate with them all relationships Companies Act No. 07 of 2007, we
• Obtain sufficient appropriate audit and other matters that may reasonably be have obtained all the information and
evidence regarding the financial thought to bear on our independence, and explanations that were required for the
information of the entities or where applicable, related safeguards. audit and, as far as appears from our
business activities within the Group
examination, proper accounting records
to express an opinion on the From the matters communicated with
have been kept by the Company.
consolidated financial statements. those charged with governance, we
We are responsible for the direction, determine those matters that were of most CA Sri Lanka membership number of
supervision and performance of significance in the audit of the financial the engagement partner responsible for
the group audit. We remain solely statements of the current period and signing this independent auditor’s report
responsible for our audit opinion. are therefore the key audit matters. We is 1697.
describe these matters in our auditor’s
We communicate with those charged report unless law or regulation precludes
with governance regarding, among other public disclosure about the matter or
matters, the planned scope and timing when, in extremely rare circumstances,
of the audit and significant audit findings, we determine that a matter should not be
including any significant deficiencies in communicated in our report because the
internal control that we identify during our adverse consequences of doing so would 30 October 2020
audit. reasonably be expected to outweigh Colombo
the public interest benefits of such
We also provide those charged with
communication.
governance with a statement that we
97
LOLC HOLDINGS PLC
Statement of Financial Position
Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Assets
Cash in hand and favourable bank balances 17.1 56,135,056 76,082,984 1,611,459 945,468
Trading assets - fair value through profit or loss 18 6,639,075 8,269,081 263,429 285,735
Investment securities 19 49,289,886 93,660,551 3,261,861 4,019,075
Assets directly associated with the assets held for sale and 52 630,111,845 - - -
discontinued operations
Financial assets at amortised cost/ Finance lease 20 58,101,502 56,231,759 2,440 3,287
receivables, hire purchases and operating leases
Financial assets at amortised cost/ Advances and other 21 331,358,634 651,045,840 5,510,840 2,483,657
loans
Insurance premium receivables 22 1,530,695 1,227,507 - -
Inventories 23 7,208,772 6,233,616 380,379 340,989
Current tax assets 24 2,051,283 1,450,561 198,824 215,920
Trade and other current assets 25 19,147,150 23,030,289 32,995,281 17,590,001
Prepaid lease rentals on leasehold properties 26 - 2,405,735 - -
Right of use assets 27 8,844,199 - 642,362 -
Investment properties 28 31,723,414 26,383,374 1,017,250 956,125
Biological assets;
Consumable biological assets 29 3,642,998 3,788,540 - -
Bearer biological assets 30 2,144,552 1,259,879 - -
Investments in group of companies;
Subsidiary companies 31 - - 90,943,740 87,671,487
Equity accounted investees 32 21,262,046 18,045,834 4,227,113 4,314,001
Deferred tax assets 33.1 1,259,639 2,123,566 - 275
Intangible assets 34 3,741,289 15,828,322 413,539 490,878
Property, plant and equipment 35 101,726,889 56,679,644 4,772,437 5,678,662
Total assets 1,335,918,925 1,043,747,286 146,240,954 124,995,559
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LOLC HOLDINGS PLC
Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Liabilities and equity

Liabilities
Bank overdrafts 17.2 4,022,416 10,508,019 1,039,522 3,629,017
Trading liabilities - fair value through profit or loss 36 114,349 841,492 - -
Liabilities directly associated with the assets held for sale 52 533,937,982 - - -
and discontinued operations
Financial liabilities at amortised cost/ Deposits liabilities 37 220,985,129 452,075,041 - -
Financial liabilities at amortised cost/ Interest bearing 38 323,027,083 377,426,242 95,412,795 69,895,035
borrowings
Insurance provision - life 39.1 4,283,247 3,458,728 - -
Insurance provision - general 39.2 4,358,359 3,718,660 - -
Current tax payables 40 5,250,922 6,162,630 660,323 733,155
Trade and other payables 41 20,340,533 30,285,764 1,390,049 1,797,418
Deferred tax liabilities 33.3 5,010,253 5,296,333 384,999 367,318
Deferred income 42 161,509 153,655 - -
Retirement benefit obligations 43 1,850,445 1,600,388 320,392 343,927
Total liabilities 1,123,342,227 891,526,951 99,208,081 76,765,871
Equity
Stated capital 44 475,200 475,200 475,200 475,200
Reserves 45 28,790,432 20,927,020 10,680,953 2,712,688
Retained earnings 46 63,267,075 64,650,231 35,876,720 45,041,802
Equity attributable to shareholders of the Company 92,532,707 86,052,451 47,032,873 48,229,690
Non-controlling interests 120,043,991 66,167,884 - -
Total equity 212,576,698 152,220,335 47,032,873 48,229,690
Total liabilities & equity 1,335,918,925 1,043,747,286 146,240,954 124,995,559
The accounting policies and notes as setout in pages 114 to 315 form an integral part of these financial statements.
Figures in brackets indicate deductions.
I certify that these Financial Statements have been prepared and are presented in compliance with the requirements of the Companies
Act, No.07 of 2007.
Mrs. S.S. Kotakadeniya

Chief Financial Officer - LOLC Group
The Board of Directors is responsible for the preparation and the presentation of these Financial Statements.
Approved and signed for and on behalf of the Board;
Mr. I.C. Nanayakkara Mr. W.D.K. Jayawardena

Deputy Chairman Group Managing Director / CEO
30th October 2020, Rajagiriya (Greater Colombo)
99
LOLC HOLDINGS PLC
Statement of Profit or Loss
Group Company
For the year ended 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Reclassified
Continuing operations
Gross income 4 130,441,678 124,313,908 9,243,797 11,650,626
Interest income 4.1 81,852,729 75,606,318 3,904,229 2,839,764

Interest expenses 6 (54,851,694) (48,640,652) (10,669,704) (8,020,071)
Net interest income/ (expenses) 27,001,035 26,965,666 (6,765,475) (5,180,307)
Revenue 4.2 24,944,735 24,805,609 2,480,478 1,557,044

Cost of sales (17,139,918) (17,070,822) (2,315,799) (1,416,625)
Gross profit 7,804,817 7,734,787 164,679 140,419
Income 4.3 14,200,638 13,670,357 4,073,060 4,652,006

Other income/(expenses) 5 9,443,576 10,231,624 (1,213,970) 2,601,812
Profit/(loss) before operating expenses 58,450,066 58,602,434 (3,741,706) 2,213,929
Operating expenses
Direct expenses excluding finance expenses 7 (7,953,138) (8,466,096) (4,427) (59,030)
Personnel expenses 8 (16,795,392) (14,363,069) (1,259,400) (1,666,994)
Net impairment loss on financial assets 9 (17,223,797) (11,466,502) (83,268) 3,788
Depreciation and amortisation 10 (4,123,926) (2,172,690) (732,379) (578,707)
Other operating expenses 11 (15,976,699) (13,693,348) (3,272,841) (3,019,168)
Results from operating activities 12 (3,622,886) 8,440,729 (9,094,021) (3,106,181)
Share of profits of equity accounted investees, net of tax 13.1 1,019,970 1,108,860 - -
Results on acquisition and divestment of group investments 14 5,979,044 - - -
Profit/ (loss) before tax expense from continuing operations 3,376,128 9,549,589 (9,094,021) (3,106,181)
Income tax expense 15 (2,563,759) (3,616,665) (118,834) (88,015)
Profit/ (loss) for the year from continuing operations 812,369 5,932,924 (9,212,855) (3,194,196)
Discontinued operations
Profit/(loss) after tax for the year from discontinued 52 18,979,489 13,703,013 - -
operations and assets held for sale
Profit for the year 19,791,858 19,635,937 (9,212,855) (3,194,196)
Profit/ (loss) attributable to; (Continuing operations)

Equity holders of the company 4,127,279 6,050,113 (9,212,855) (3,194,196)
Non-controlling interests (3,314,910) (117,190) - -
812,369 5,932,923 (9,212,855) (3,194,196)
Profit attributable to; (Discontinued operations)

Equity holders of the Company 6,766,717 5,240,539 - -
18,979,489 13,703,013 - -
Profit attributable to;

Equity holders of the Company 10,893,997 11,290,652 (9,212,855) (3,194,196)
19,791,858 19,635,937 (9,212,855) (3,194,196)
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LOLC HOLDINGS PLC
Statement of Comprehensive Income
Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Profit/ (loss) for the year 19,791,858 19,635,937 (9,212,855) (3,194,196)
Other comprehensive income

Revaluation surplus of property, plant and equipment
Revaluation of property, plant and equipment 1,129,021 2,160,982 - -
Transfer on impairment (679,190) - (679,190) -
Related tax 15.9 - (363,563) - -
Defined benefit plan actuarial gains / (losses)

Re-measurement of defined benefit liabilities 43 (218,369) (59,364) 66,351 (4,591)
Related tax 15.9 47,887 (1,323) (18,578) (1,286)
Change in fair value on investments in equity instruments at fair value through

other comprehensive income
Change in fair value on investments in equity instruments at fair value through 41,309 (103,417) - (101,931)
Related tax 15.9 (68,501) (80,796) - -
Share of other comprehensive income of equity accounted investees (net of tax) 13.2 244,964 27,895 - -
Net other comprehensive income not to be reclassified to income statement in 497,121 1,580,414 (631,417) (107,808)
subsequent periods
Change in fair value on investments in debt instruments at fair value through

Fair value gains/(losses) on debt instruments that arose during the year 64,733 (91,976) - -
Related tax 15.9 120 3,018 - -
Foreign currency translation differences for foreign operations

Exchange gain/ (losses) from translation of foreign operations 9,399,732 8,455,406 - -
Fair value differences on cash flow hedges

Net movement in cash flow hedges (54,045) 7,458 - -
Net change in costs of hedging (53,125) (45,453) - -
Related tax 15.9 30,008 (26,071) - -
Share of other comprehensive income of equity accounted investees (net of tax) 13.2 504,595 52,977 - -
Net other comprehensive income to be reclassified to income statement in 9,892,018 8,355,359 - -
subsequent periods
Total other comprehensive income/ (expense) for the year, net of tax 10,389,139 9,935,774 (631,417) (107,808)
Total comprehensive income for the year, net of tax 30,180,997 29,571,710 (9,844,272) (3,302,004)
Total comprehensive income attributable to;

Equity holders of the Company 14,990,891 15,962,775 (9,844,272) (3,302,004)
30,180,997 29,571,710 (9,844,272) (3,302,004)
Basic earnings/ (loss) per share 16.1

Basic, profit/ (loss) for the year attributable to ordinary equity holders of the parent 22.93 23.76 (19.39) (6.72)
Diluted, profit/ (loss) for the year attributable to ordinary equity holders of the 22.93 23.76 (19.39) (6.72)
parent
Earnings/ (loss) per share for continuing operations

Basic, profit/ (loss) from continuing operations attributable to ordinary equity 8.69 12.73 (19.39) (6.72)
holders of the parent
Diluted, profit/ (loss) from continuing operations attributable to ordinary equity 8.69 12.73 (19.39) (6.72)
101
LOLC HOLDINGS PLC
Statement of Changes in Equity
Company Stated Revaluation Fair Value

Capital Reserve Reserve
Note Rs.'000 Rs.'000 Rs.'000
Balance as at 31 March 2018 475,200 2,715,503 9,708
Impact of adoption of SLFRS 9

Recognition of SLFRS 9 ECLs including those measured at FVOCI - - -
Deferred tax on transitional adjustments - - -
Total change in equity due to adopting SLFRS 9 and SLFRS 15 - - -
Restated opening balance under SLFRS 9 and SLFRS 15 as at 01 April, 475,200 2,715,503 9,708
2018
Total comprehensive income for the period

Loss for the year - - -

Other comprehensive income that will never be reclassified to profit or loss in
subsequent periods:
Re-measurement of defined benefit liabilities 43 - - -

Related tax 15.9 - - -
Change in fair value on investments in equity instruments at fair value - - (101,931)

through other comprehensive income
Total comprehensive income/(expense) for the period - - (101,931)
Transactions with owners directly recorded in the Equity
Other movements of equity

Amalgamation gain/(loss) - - -
Total contribution by / (distributions to) owners of the Company - - -
Balance as at 31 March 2019 475,200 2,715,503 (92,223)
Balance as at 01 April 2019 475,200 2,715,503 (92,223)
102
LOLC HOLDINGS PLC
Equity attributable to the shareholders of the Company

Future Merger/ Retained Total
Taxation Amalgamation Earnings
Reserve Reserve
Rs.'000 Rs.'000 Rs.'000 Rs.'000
205,000 - 48,229,945 51,635,356
- - 16,570 16,570
- - (4,640) (4,640)
- - 11,930 11,930
205,000 - 48,241,875 51,647,286
- (3,194,196) (3,194,196)
- (4,591) (4,591)
- (1,286) (1,286)
- - - (101,931)
- - (3,200,073) (3,302,004)
- (115,592) - (115,592)
- (115,592) - (115,592)
205,000 (115,592) 45,041,802 48,229,690
205,000 (115,592) 45,041,802 48,229,690
103
LOLC HOLDINGS PLC
Company Stated Revaluation Fair Value

Capital Reserve Reserve
Note Rs.'000 Rs.'000 Rs.'000

Loss for the year - - - -

subsequent periods:
Transfer on Impairment - (679,190) -

Total other comprehensive income for the period - (679,190) -
Total comprehensive income for the period - (679,190) -
Other movements of equity

Amalgamation Gain/(loss)
Total other movements - - -
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LOLC HOLDINGS PLC

Future Merger/ Retained Total
Taxation Amalgamation Earnings
Reserve Reserve
Rs.'000 Rs.'000 Rs.'000 Rs.'000
- - (9,212,855) (9,212,855)
- - - (679,190)
-
- - 66,351 66,351
- - (18,578) (18,578)
- - 47,773 (631,417)
- - (9,165,082) (9,844,272)
8,647,455 8,647,455
- 8,647,455 - 8,647,455
205,000 8,531,863 35,876,720 47,032,873
105
LOLC HOLDINGS PLC
Group Stated Revaluation Cash Flow

Capital Reserve Hedge
Reserve
Note Rs.' 000 Rs.' 000 Rs.' 000
Balance as at 01 April 2018 475,200 7,583,355 (41,026)
Impact of adoption of SLFRS 9 and SLFRS 15
Recognition of SLFRS 9 ECLs including those measured at FVOCI - - -

Impact of reclassifying financial investment from AFS to FVTPL - - -
Impact for equity accounted investees - - -
Restated opening balance under SLFRS 9 and SLFRS 15 as at 01 April 2018 475,200 7,583,355 (41,026)

Profit for the period from continuing operations - - -
Profit for the period from discontinued operations - - -

subsequent periods:
Revaluation of property, plant and equipment 35 - 1,870,570 -
Transfer upon disposal - (214,965) -
Related tax 15.9 - (303,636) -

Change in fair value on investments in equity instruments at fair value through - - -

Share of other comprehensive income of equity accounted investees (net of tax) - (20,806) -
Other comprehensive income that are or may be reclassified to profit or loss in

subsequent periods:
Fair value gains/(losses) on debt instruments that arose during the year - - -
Exchange gain/ (losses) from translation of foreign operations - - -
Net movement in cash flow hedges - - 7,395

Net change in costs of hedging - - (42,421)
Related tax 15.9 - - (26,594)
Share of other comprehensive income of equity accounted investees (net of tax) - - 4,519
Total other comprehensive income for the period - 1,331,163 (57,101)
Total comprehensive income for the period - 1,331,163 (57,101)
106
LOLC HOLDINGS PLC

Fair Value Translation Future Statutory Retained Total Non- Total Equity
Reserve Reserve Taxation Reserve Earnings controlling
Reserve Fund Interests
Rs.' 000 Rs.' 000 Rs.' 000 Rs.' 000 Rs.' 000 Rs.' 000 Rs.' 000 Rs.' 000
171,674 1,101,555 205,000 2,663,011 58,303,245 70,462,014 47,070,541 117,532,555
- - - - (410,505) (410,505) 998,697 588,192

- - - - 137,764 137,764 (196,643) (58,879)
(1,482) - - - 1,482 - - -
(526,798) - - - (43,756) (570,554) (19,883) (590,437)
(356,606) 1,101,555 205,000 2,663,011 57,988,230 69,618,719 47,852,712 117,471,431
- - - - 6,050,113 6,050,113 (117,190) 5,932,923

- - - - 5,240,539 5,240,539 8,462,474 13,703,013
- - - - - 1,870,570 290,412 2,160,982

- - - - 214,965 - - -
- - - - (303,636) (59,927) (363,563)
- - - - (9,099) (9,099) (50,265) (59,364)

- - - - (7,971) (7,971) 6,648 (1,323)
(108,323) - - - (108,323) 4,906 (103,417)
(70,664) - - - (70,664) (10,132) (80,796)
(457) - - - 26,904 5,641 (7,649) (2,008)
(89,338) - - - (89,338) (2,638) (91,976)

2,817 - - - 2,817 201 3,018
- 3,365,649 - - - 3,365,649 5,089,757 8,455,406
- - - - - 7,395 63 7,458
- - - - - (42,421) (3,032) (45,453)
- - - - - (26,594) 523 (26,071)
84,746 (11,168) - - - 78,097 4,784 82,881

(181,219) 3,354,481 - - 224,799 4,672,123 5,263,651 9,935,774
(181,219) 3,354,481 - - 11,515,451 15,962,775 13,608,935 29,571,710
107
LOLC HOLDINGS PLC

Reserve
Note Rs.' 000 Rs.' 000 Rs.' 000
Contributions by and distributions to owners

Dividend forfeited during the period - - -
Total contribution by / (distributions to) owners of the Company - - -
Transactions due to changes in group holding

Non-controlling interests recognised on acquisition of subsidiaries 31.6.2.4 - - -
NCI contribution for subsidiary share issues - - -
Acquisition of non-controlling interests - - -
Changes in ownership interests that do not result in a change in control - - -
Total transactions due to changes in group holding - - -
Total transactions with owners directly recorded in the Equity - - -
Other movements in equity

Depreciation transfer on revaluation - (803) -
Net transfers to / (from) statutory reserve fund - - -
Total other movements - (803) -
Impact of adoption of SLFRS 16

Impact of adoption of SLFRS 16 - (21,888) -
Restated opening balance under SLFRS 16 as at 01 April, 2019 475,200 8,891,827 (98,127)

Profit for the period from continuing operations - - -
Profit for the period from discontinued operations - - -

subsequent periods:
Revaluation of property, plant and equipment 35 - 721,932 -
Transfer upon disposal - (4,480) -
Transfer on Impairment - (679,190) -
108
LOLC HOLDINGS PLC

- - - - - - 276 276
- - - - - - 276 276
- - - - - - (13,799) (13,799)
- - - - - - 4,649,520 4,649,520
- - - - - - (342,229) (342,229)
- - - - 470,957 470,957 412,469 883,426
- - - - 470,957 470,957 4,705,961 5,176,918
- - - - 470,957 470,957 4,706,237 5,177,194
- - - - 803 - - -
- - - 5,325,210 (5,325,210) - - -
- - - 5,325,210 (5,324,407) - - -
(537,825) 4,456,036 205,000 7,988,221 64,650,231 86,052,451 66,167,884 152,220,335
- - - - (94,636) (116,524) (110,553) (227,077)

- - - - 3,598 3,598 9,935 13,533
(537,825) 4,456,036 205,000 7,988,221 64,559,193 85,939,525 66,067,266 152,006,791
- - - - 4,127,279 4,127,279 (3,314,910) 812,369

- - - - 6,766,717 6,766,717 12,212,772 18,979,489
- - - - - 721,932 407,089 1,129,021

- - - - 4,480 - - -
- - - - - (679,190) - (679,190)
109
LOLC HOLDINGS PLC

Reserve
Note Rs.' 000 Rs.' 000 Rs.' 000
Re-measurement of defined benefit liabilities - - -
Change in fair value on investments in equity instruments at fair value through - - -

Share of other comprehensive income of equity accounted investees (net of tax) - 38,394 -

subsequent periods:
Fair value gains/(losses) on debt instruments that arose during the year - - -
Related tax - - -
Exchange gain/ (losses) from translation of foreign operations - - -

Net movement in cash flow hedges - - (53,591)
Net change in costs of hedging - - (43,345)
Related tax 15.9 - - 27,142
Share of other comprehensive income of equity accounted investees (net of tax) - - (18,672)
Total other comprehensive income for the period - 76,656 (88,466)
Total comprehensive income for the period - 76,656 (88,466)

NCI contribution for subsidiairy share issues 31.9 - - -
Non-controlling interests recognised on acquisition of subsidiaires 31.6.1 - - -
Acquisition of non-controlling interests 31.8 - - -
Disposal of subsidiaries 31.7 - - -
Changes in ownership interests that do not result in a change in control - - -
Total transactions due to changes in group holding - - -
Total transactions with owners directly recorded in the Equity - - -
Other movements in equity

Net transfers to / (from) statutory reserve fund - - -
Total other movements - - -
The accounting policies and notes as setout in pages 114 to 315 form an integral part of these financial statements .
Figures in brackets indicate deductions
110
LOLC HOLDINGS PLC

- - - - (154,610) (154,610) (63,759) (218,369)
- - - - 34,637 34,637 13,250 47,887
15,334 - - - - 15,334 25,975 41,309
(54,132) - - - - (54,132) (14,369) (68,501)
82,223 - - - 66,716 187,333 57,631 244,964
60,720 - - - - 60,720 4,013 64,733

119 - - - - 119 1 120
- 3,559,053 - - - 3,559,053 5,840,679 9,399,732

- - - - - (53,591) (454) (54,045)
- - - - - (43,345) (9,780) (53,125)
- - - - - 27,142 2,866 30,008
491,608 2,557 - - - 475,493 29,102 504,595

595,872 3,561,610 - - (48,777) 4,096,895 6,292,244 10,389,139
595,872 3,561,610 - - 10,845,219 14,990,891 15,190,106 30,180,997
- - - - - - 2,614,250 2,614,250
- - - - - - 27,776,879 27,776,879
- - - - (31,919) (31,919) (71,630) (103,549)
- - - - - - 101,330 101,330
- - - - (8,365,790) (8,365,790) 8,365,790 -
- - - - (8,397,709) (8,397,709) 38,786,619 30,388,910
- - - - (8,397,709) (8,397,709) 38,786,619 30,388,910
- - - 3,739,628 (3,739,628) - - -
- - - 3,739,628 (3,739,628) - - -
58,047 8,017,646 205,000 11,727,849 63,267,075 92,532,707 120,043,991 212,576,698
111
LOLC HOLDINGS PLC
Statement of Cash Flows
Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
CASH FLOW FROM OPERATING ACTIVITIES

Profit before income tax expense from continuing operations 3,376,128 9,549,589 (9,094,021) (3,106,181)
Profit/(loss) before tax from discontinued operations 23,749,036 17,267,972 - -
Profit before tax 27,125,164 26,817,561 (9,094,021) (3,106,181)
Adjustments for:
(Profit)/Loss on sale of property, plant and equipment 5 (98,652) (172,327) (30,767) (50,770)
Depreciation and amortisation 10/52 3,938,939 2,601,687 612,356 578,707
Amortisation of right of use asset 10/52 1,310,535 - 120,023 -
Insurance provision 1,464,218 860,929 - -
Change in fair value of forward contracts 5 (1,507,651) (4,682,010) - -
Provision for gratuity 43.1 962,098 519,317 69,479 62,773
Net impairment (loss) / reversal on financial assets 9/52 19,348,265 14,061,223 221,260 (3,788)
Provision for fall/(increase) in value of investments 5 (593,994) (1,194,689) 22,306 55,664
Investment Income 5 (3,934,610) (5,006,078) (11,436) (61,051)
Net finance costs 6/52 86,869,725 71,126,873 6,765,477 8,020,071
(Profit)/loss on sale of quoted and non-quoted shares 5 407,812 - 2,531,552 -
Foreign exchange gain / (loss) 5 1,620,217 5,096,417 - -
Share of profits of equity accounted investees 13.1 (1,019,970) (1,108,860) - -
Results on acquisition and divestment of group investments 14 (5,979,044) - - -
(Gain)/ Loss on fair value of consumer biological assets 29.1 136,816 (439,076) - -
Change in fair value of investment properties 28 (3,915,140) (4,067,925) (27,933) (72,004)
Amortisation of deferred income 42 (7,033) (32,771) - -
Provision/ (reversal) for slow moving inventories 23.1 482,825 (151,135) - -
Sale of timber 5 (71,134) - - -
Impairment loss on biological assets 30 110,085 - - -
Impairment loss on PPE 35 95,703 - - -
Operating profit before working capital changes 126,745,173 104,229,136 1,178,296 5,423,421
Working capital changes

Increase/(decrease) in trade and other payables 2,028,656 (7,017,873) (1,374,216) (3,714,042)
(Increase)/decrease in investment in leases, hire purchase and others (2,981,687) 4,049,183 847 (399)
(Increase)/decrease in investment in advances and other loans (204,753,695) (170,022,216) (3,034,688) (137,671)
(Increase)/decrease in premium receivables (303,188) (114,541) - -
(Increase)/decrease in inventories 128,815 (1,462,804) (39,390) (89,113)
(Increase)/decrease in trade and other receivables 3,224,098 2,571,267 (15,439,576) (1,795,624)
Increase/(decrease) in customer deposits 111,867,426 144,546,441 - -
Cash generated from operations 35,955,597 76,778,593 (18,708,727) (313,428)
Finance cost paid (85,359,280) (76,659,215) (9,703,224) (7,509,459)

Income tax and Economic Service Charge paid (9,220,755) (6,300,091) (174,570) (116,146)
Defined benefit plan costs paid (744,841) (434,046) (26,663) (14,130)
Net cash from/(used in) operating activities (59,369,279) (6,614,759) (28,613,184) (7,953,163)
112
LOLC HOLDINGS PLC
Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
CASH FLOW FROM INVESTING ACTIVITIES
Investment in subsidiary companies - - (17,594,527) (16,810,517)
Net cash and cash equivalents on acquisition of 31.6.1.5 (4,520,049) (70,659) 146 10,543
subsidiary
Disposal of associates 32.5 - - (713,112) -
Net cash and cash equivalents received on disposal of 31.7.1.4 1,597,438 - 9,987,724 -
subsidiary
Investment in equity accounted investees 32.6 (1,433,295) (167,426) - -
Acquisition of Investment properties 28 (2,272,955) - (712,382) (1,621)
Acquisition of PPE 35 (9,523,433) (13,288,195) 242,918 (1,170,811)
Acquisition of right of use asset - - (642,361) -
Acquisition / (Disposal) of intangible assets 34.5 (278,264) (645,377) (65,078) (272,942)
Net additions to trading assets 2,979,685 (3,905,929) 11,043,835 85,774
Net additions to investment securities 69,245,407 (13,805,469) 784,597 11,209,932
Proceeds from the disposal of PPE 450,089 366,275 104,112 345,026
Investment income received 3,561,380 4,977,025 3,904,228 -
Dividend received 93,097 193,546 11,436 61,051
Net additions of biological assets (612,911) (143,890) - -
Net cash flow from investing activities 59,286,190 (26,490,099) 6,351,536 (6,543,565)
CASH FLOW FROM FINANCING ACTIVITIES

Net cash proceeds from short term borrowings 67,845,749 (592,779) 26,613,191 15,225,359
Principal repayment under finance lease liabilities 38.2.1 (413,087) (377,045) (37,702) 85,798
Proceeds from long term borrowings 38.3 118,584,523 154,041,409 201,021 596,971
Repayments of long term borrowings 38.3 (92,836,408) (103,292,431) (1,913,225) (1,916,329)
Issue / (repayment) of debentures (5,786,850) 2,750,000 - -
Net increase/(decrease) Operating Lease Payable on (1,648,354) - 653,848 -
ROU Assets
Receipt of deferred income 42 14,887 4,002 - -
NCI contribution to subsidiary share issues 31.9 2,614,250 4,649,520 - -
Acquisition of non-controlling interests 31.8 (103,549) (342,229) - -
Net cash generated from financing activities 88,271,160 56,840,447 25,517,133 13,991,799
Net increase/(decrease) in cash and cash equivalents 88,188,071 23,735,588 3,255,485 (504,929)
during the year
Cash and cash equivalents at the beginning of the year 65,574,965 41,839,377 (2,683,548) (2,178,619)
153,763,036 65,574,965 571,937 (2,683,548)
Analysis of cash and cash equivalents at the end of 17/52

the year
Cash in Hand and Favourable Bank Balances 157,785,673 76,082,984 1,611,459 945,468
Unfavourable Bank Balances used for cash (4,022,637) (10,508,019) (1,039,522) (3,629,017)
management purposes
153,763,036 65,574,965 571,937 (2,683,548)
113
LOLC HOLDINGS PLC
Notes to the Financial Statements
1. REPORTING ENTITY changes in the nature of the principal SLFRSs and LKASs, regulations governing
1.1 General activities of the Company and the Group the preparation and presentation of the
during the financial year under review. Financial Statements.
LOLC Holdings PLC (‘the Company’) is
a public quoted company incorporated All the group companies incorporated Details of the Group’s Significant
on 14 March 1980 and domiciled in Sri and domiciled in Sri Lanka except for Accounting Policies followed during the
Lanka. The address of the Company’s subsidiaries and associates which are year are given in Note 3 on pages 119 to
registered office is No. 100/1, Sri disclosed to note 31.3 and 32 to these 144.
Jayawardenapura Mawatha, Rajagiriya, financial statements.
Sri Lanka and the principal place of 2.2 Presentation of Financial
business is situated at the same place. 1.3 Parent Entity and Ultimate Statements
Parent Entity The assets and liabilities of the Group
The Consolidated Financial Statements
LOLC Holdings PLC is the holding presented in the Statement of Financial
of the Group as at and for the year
company of the Group and therefore, it Position are grouped by nature and listed
ended 31st March 2020 comprise of the
does not have an identifiable immediate or in-order to reflect their relative liquidity and
Company and its subsidiaries (together
ultimate parent of its own. LOLC Holdings maturity pattern. An analysis regarding
referred to as the “Group” and individually
PLC became the holding company of the recovery or settlement within twelve
as “Group entities”) and the Group’s
Group during the financial year ended 31 months after the reporting date (current)
interest in associates and jointly controlled
March 2011. and more than twelve months after the
entities.
reporting date (non-current) is presented in
The Group is primarily involved in 2. BASIS OF PREPARATION note 56 (Maturity analysis)
providing diversified financial solutions 2.1 Statement of Compliance
Financial assets and financial liabilities
to a wide variety of customer segments The Financial Statements of the Company are offset and the net amount reported in
and also engaged in diversified activities and those consolidated with such are the Statement of Financial Position only
such as manufacturing, trading, leisure, prepared in accordance with the Sri Lanka when there is a legally enforceable right to
plantations, real estate development, Accounting Standards (SLFRS/LKAS) off-set the recognised amounts and there
construction and power & energy etc. laid down by The Institute of Chartered is an intention to settle on a net basis, or
Accountants of Sri Lanka (ICASL) and in to realise the assets and settle the liability
Ordinary shares of the Company are listed
compliance with the Companies Act No. simultaneously. Income and expenses
on the main board of the Colombo Stock
07 of 2007. These SLFRSs and LKASs are are not offset in the Statement of profit or
Exchange (CSE).
available at www.casrilanka.com. loss unless required or permitted by an
1.2 Principal Activities and Nature of accounting standard or an interpretation,
The presentation of these Financial
Operations and as specially disclosed in the
Statements is also in compliance with
LOLC Holdings PLC, the Group’s accounting policies of the Group.
the requirements of the Finance Leasing
holding Company, manages a portfolio Act No 56 of 2000, Finance Business No adjustments have been made for
of investments consisting of a range Act No 42 of 2011 and Insurance inflationary factors affecting the Financial
of diverse business operations, which Industry Act No 43 of 2000 subsequent Statements.
together constitute the LOLC Group, and amendments thereto and provide
provides function based services to its appropriate disclosures as required by the 2.3 Basis of Measurement
subsidiaries, jointly controlled entities and Listing Rules of the CSE. These Financial
The Financial Statements of the Group
associates. Statements, except for information on
and the Company have been prepared
cash flows have been prepared following
Description of the nature of operations on the historical cost basis, except for the
the accrual basis of accounting.
and principle activities of the subsidiaries, following material items in the statement of
jointly-controlled entities and associates The Group did not adopt any inappropriate financial position.
are given on note 31.3 to these Financial accounting treatments, which are not in
Statements. There were no significant compliance with the requirements of the
114
LOLC HOLDINGS PLC
Items Basis of measurement Note No/s Page/s

Fair value through profit and Fair value 18 160
loss
Derivative financial instruments Fair value 18.4 163
Fair value through other Fair value 19 164
comprehensive income/
Available for sale
The liability for defined benefit Net liability for defined benefit obligations are recognised as the present 43 257
obligations value of the defined benefit obligation, plus unrecognised actuarial gains,
less unrecognised past service cost, and unrecognised actuarial losses
Lands and buildings Measured at cost at the time of acquisition and subsequently at revalued 35 234
amounts which are the fair values at the date of revaluation
Investment properties Fair value 28 194
Agricultural produces Fair value less cost to sell 23 186
Consumable Biological assets Fair value less cost to sell 29 196
2.4 Functional and Presentation assets, liabilities, income and expenses. Critical accounting Disclosure
Currency Actual results may differ from these estimate/judgment reference
The functional currency is the currency estimates. Note
of the primary economic environment in Financial Instruments – fair 54
Estimates and underlying assumptions
which the entities of the Group operate value disclosure
are based on historical experience and
(the Functional Currency). The Financial
various other factors that are believed to Impairment of financial 19
Statements are presented in Sri Lankan
be reasonable under the circumstances, investments
Rupee (LKR), which is the functional
the results which form the basis of making Revaluation of property, 35.2
currency of the Group. All financial
the judgments about the carrying amount plant and equipment
information presented in Rupee has been
of assets and liabilities that are not readily
rounded to the nearest Rupees thousands Determination in fair value 28.4
apparent from other sources.
unless stated otherwise. of Investment properties
Estimates and underlying assumptions are Useful lives of intangible 3.6.5
Each entity in the Group determines
reviewed on an ongoing basis. Revisions assets
its own functional currency and items
to accounting estimates are recognised Useful lives of property, 3.7.1.7
included in the Financial Statements of
in the period in which the estimates are plant and equipment
these entities are measured using that
revised and in any future periods affected. Useful lives of Bearer 3.28.7
Functional Currency. There was no change
in the Group’s Presentation and Functional biological assets
Information about critical judgments in
Currency during the year under review. applying accounting policies that have the Determination in fair value 29.7
most significant effect on the amounts of Consumer biological
The information presented in US Dollars
recognised in the Financial Statements are assets
in the Section on “Supplementary
included in the following notes to these Goodwill on acquisition 3.1.14
Information” on pages 325 and 327 does
Financial Statements.
not form part of the Financial Statements Gain on bargain purchase 3.1.15
and is made available solely for the
Critical accounting Disclosure Insurance provision – life 3.27.5.6
information of stakeholders.
estimate/judgment reference Insurance provision – 3.27.4.8
Note general
2.5 Use of Estimates and Judgment
The preparation of the Financial Classification of financial 54 Unearned premium reserve 3.27.4.3
Statements in conformity with SLFRSs/ assets and liabilities
Deferred acquisition cost 3.27.4.6
LKAS’s requires management to make Fair Value of financial 3.3
judgments, estimates and assumptions instruments Deferred tax 3.9.2
that affect the application of accounting Defined benefit obligation 3.13.2
policies and the reported amounts of
115
LOLC HOLDINGS PLC
Critical accounting Disclosure as of 1st April 2019 and are disclosed in any material uncertainties that may cast
estimate/judgment reference note 53.1 on pages 275 to 277. significant doubt upon the Group’s ability
Note to continue as a going concern. Therefore,
2.7 Materiality, Presentation and going-concern basis has been adopted in
Deferred tax on 3.9.2.2
Aggregation preparing these Financial Statements.
undistributed profits
As per LKAS – 01 “Presentation of
of equity accounted
Financial Statements”, each material class 2.10 Directors’ Responsibility for the
investees
of similar items are presented separately Financial Statements
Write-off policy 3.4.3.6 in the Financial Statements. Items of The Board of Directors is responsible for
Collective allowance for 3.4.3 dissimilar nature or function are presented the preparation and fair presentation of
impairment separately unless they are immaterial. these Financial Statements in accordance
Leasehold right to bare land 3.28.9 with Sri Lanka Accounting Standards and
Notes to the Financial Statements as per the provisions of the Companies
Impairment of non-financial 3.8 are presented in a systematic manner Act No. 07 of 2007. This responsibility
assets which ensures the understandability and includes: designing, implementing and
Nature of the relationship 31.5 comparability of Financial Statements maintaining internal controls relevant to
between the parent and of the Group and the Company. the preparation and fair presentation of
subsidiaries when the Understandability of the Financial Financial Statements that are free from
parent does not own, more Statements is not compromised by material misstatement, whether due to
than half of the voting obscuring material information with fraud or error; selecting and applying
power immaterial information or by aggregating appropriate accounting policies; and
material items that have different natures making accounting estimates that are
Material NCI 31.10
or functions. reasonable in the circumstances.
Provisions for liabilities, 3.15
commitments and The assets and liabilities of the Group The Board of Directors acknowledges their
contingencies presented in the Statement of Financial responsibility as set out in the “Annual
Position are grouped by nature and listed Report of the Board of Directors on the
2.6 Comparative Information in an order that reflects their relative Affairs of the Company” and “Director’s
liquidity and maturity pattern. Responsibility for Financial Reporting”.
Comparative information including
quantitative, narrative and descriptive
2.8 Offsetting These Financial Statements include the
information is disclosed in respect of
Financial assets and financial liabilities following components;
the previous period in the Financial
Statements in order to enhance the are offset and the net amount reported in
the Statement of Financial Position, only • A Statement of Financial Position
understanding of the current period’s providing the information on the
Financial Statements and to enhance when there is a legally enforceable right to
offset the recognised amounts and there financial position of the Group and the
the inter period comparability. The Company as at the year end.
presentation and classification of the is an intention to settle on a net basis or to
Financial Statements of the previous year realise the assets and settle the liabilities
• A Statement of Profit or Loss
are amended, where relevant for better simultaneously. Income and expenses
providing the information on the
presentation and to be comparable with are not offset in the Income Statement,
financial performance of the Group
those of the current year. unless required or permitted by an
and the Company for the year under
Accounting Standard or Interpretation
review.
The Group has not restated the (issued by the International Financial
comparative information for 2018/19, Reporting Interpretations Committee and • A Statement of Other Comprehensive
due to the transition method chosen in Standard Interpretations Committee) and Income providing the information of
applying these standards for financial as specifically disclosed in the Significant the other comprehensive income of
instruments within the scope of SLFRS Accounting Policies of the Group. the Group and the Company.
16 - “leases”. Therefore, the comparative
information for 2018/19 is not restated 2.9 Going Concern • A Statement of Changes in Equity
and is not comparable to the information The Board of Directors is satisfied that depicting all changes in shareholders’
presented for financial year 2019/20. the Group has adequate resources to funds during the year under review of
Differences arise from adoption of SLFRS continue its operations in the foreseeable the Group and the Company.
16 have been recognised directly in equity future and management is not aware of
116
LOLC HOLDINGS PLC
• A Statement of Cash Flows providing lessees to account for all leases under a Right of use assets
the information to the users, on single on-balance sheet model. The Group The Group recognises right of use
the ability of the Group and the has adopted SLFRS 16 using modified assets when the underlying asset is
Company to generate cash and cash retrospective method from 1 April 2019, available for use. Right of use assets are
equivalents and the needs of entities without restating comparatives for the measured at cost, less any accumulated
to utilise those cash flows, and 2018/19 reporting period, as permitted depreciation and impairment losses, and
under the specific transitional provisions in adjusted for any re-measurement of lease
• Notes to the Financial Statements the standard. liabilities. The cost of right of use assets
comprising Accounting Policies and
includes the amount of lease liabilities
other explanatory information. Lessor accounting under SLFRS 16 is
recognised, initial direct costs incurred,
substantially unchanged from under LKAS
and lease payments made at or before
2.11 Approval of Financial 17. Lessors will continue to classify leases
the commencement date less any lease
Statements by the Board of as either operating or finance leases using
incentives received. Unless the Group is
Directors similar principles as in LKAS 17. Therefore,
reasonably certain to obtain ownership of
The Financial Statements of the Group SLFRS 16 does not have an impact for
the leased asset at the end of the lease
and the Company for the year ended 31 leases where the Group is the lessor.
term, the recognised right of use assets
March 2020 including comparatives) were are depreciated on a straight-line basis
approved and authorised for issue by the On adoption of SLFRS 16, the Group
recognised right-of-use assets and lease over the shorter of its estimated useful life
Board of Directors on 30th October 2020. or the lease term. Right of use assets are
liabilities in relation to leases which had
previously been classified as ‘operating subject to impairment.
2.12 Changes in Accounting Policies
leases’ under the principles of LKAS 17,
The Group has consistently applied Right-of-use assets are recognised at cost
‘Leases’.
the accounting policies as set out in comprising the following:
Note 3 to all periods presented in these
Leases previously classified as finance • the amount of the initial measurement
consolidated financial statements except
leases of lease liability
for SLFRS 16 – “Leases”. The information
on the application on the aforementioned For leases previously classified as finance
leases, the entity recognised the carrying • any lease payments made at or
standards are prescribed below together
amount of the lease asset and lease before the commencement date less
with the related impact to the financial
liability immediately before transition as the any lease incentives received
statements.
carrying amount of the right of use asset
• any initial direct costs, and
2.12.1 Accounting Standards and and the lease liability at the date of initial
amendments adopted for the application. The requirements of SLFRS • restoration costs.
period 16 was applied to these leases from 1
April 2019. The opening adjustment as at 1st April
In preparing the financial statements of
2019, represents the carrying value
the group and the separate entities, the
Leases previously accounted for as of the right-of-use assets relating to
group has adopted SLFRS 16 and IFRIC
operating leases ongoing lease contracts measured on a
23 which became effective for the annual
The Group recognised right of use assets retrospective basis as if the Standard had
reporting periods beginning on or after 1
and lease liabilities for those leases been applied since the commencement
January 2019.
previously classified as operating leases. date of the contract.
2.12.2 Leases The right of use assets for most leases

were recognised based on the carrying Lease liabilities
SLFRS 16 supersedes LKAS 17
amount as if the standard had always At the commencement date of the lease,
Leases, IFRIC 4 Determining whether an
been applied, apart from the use of the Group recognises lease liabilities
Arrangement contains a Lease, SIC-15
incremental borrowing rate at the date measured at the present value of lease
Operating Leases-Incentives and SIC-27
of initial application. Lease liabilities were payments to be made over the lease
Evaluating the Substance of Transactions
recognised based on the present value of term. In calculating the present value
Involving the Legal Form of a Lease. The
the remaining lease payments, discounted of lease payments, the Company uses
standard sets out the principles for the
using the incremental borrowing rate at the incremental borrowing rate at the
recognition, measurement, presentation
the date of initial application. lease commencement date if the interest
and disclosure of leases and requires
rate implicit in the lease is not readily
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LOLC HOLDINGS PLC
determinable. After the commencement Assumption on Extension Option and • How an entity considers changes in
date, the amount of lease liabilities Cancellation Option facts and circumstances
is increased to reflect the accretion SLFRS 16 specifies that the lessee is
The Group determines whether to
of interest and reduced for the lease required to assess whether it is reasonably
consider each uncertain tax treatment
payments made. In addition, the carrying expected to extend the lease period.
separately or together with one or more
amount of lease liabilities is re-measured Based on our business model forecast
other uncertain tax treatments and uses
if there is a modification, a change in the and our past experience, we assumed
the approach that better predicts the
lease term, a change in the in-substance that the operating leasing agreements
resolution of the uncertainty.
fixed lease payments or a change in the will continue for another 3 years. For this
assessment to purchase the underlying purpose, we have exercised this extension The group applies significant judgement
asset. option for operating leases which are in identifying uncertainties over income
expiring within next two years. Based on tax treatments. Since the Group operates
The opening adjustment as at 1st April
our experience, we believe that, in the in a complex environment, it assessed
2019, represents the present value of
event of cancellation of an agreement, whether the Interpretation had an impact
the remaining lease payments, relating to
the Company will enter into a new rent on its Consolidated Financial Statements.
ongoing lease contracts, discounted using
agreement to continue and ensure its The Group determined, based on its tax
the lessee’s incremental borrowing rate as
smooth business operation. Therefore, compliance and transfer pricing study
of 1st April 2019.
we have not considered the cancellation that it is probable that its tax will be
option in our calculations. accepted by the taxation authorities. The
Short-term leases and leases of low-
Interpretation did not have an impact on
value assets
Timing of the lease payments the Financial Statements of the Group.
The Group applies the short-term lease
Based on our past experience, we
recognition exemption to leases that have
assumed that the rent payments will occur 2.13 New accounting standards
a lease term of 12 months or less from
at the end of the month (paid in arrears). issued but not yet effective
the commencement date. It also applies
Therefore, discount factors adjusted 2.13.1 Amendments to SLFRS 3:
the lease of low-value assets recognition
accordingly. Definition of a Business
exemption to leases of office equipment
that are considered of low value. Lease Amendments to the definition of
2.12.3 IFRIC 23 – Uncertainty over
payments on short-term leases and leases a business in SLFRS 3 Business
income tax treatment
of low-value assets are recognised as Combinations are made to help the
The Interpretation addresses the
expense on a straight-line basis over the entities determine whether an acquired
accounting for income taxes when tax
lease term. set of activities and assets is a business
treatments involve uncertainty that affects
or not. They clarify the minimum
the application of LKAS 12 – “Income
Incremental Borrowing Rate requirements for a business, remove
Taxes”. It does not apply to taxes or levies
‘The rate of interest that a lessee would the assessment of whether market
outside the scope of LKAS 12, nor does
have to pay to borrow over a similar participants are capable of replacing
it specifically include requirements relating
term and with similar security, the funds any missing elements, add guidance to
to interest and penalties associated
necessary to obtain an asset of similar help entities assess whether an acquired
with uncertain tax treatments. The
value to the right-of-use asset in a similar process is substantive, narrow the
Interpretation specifically addresses the
economic environment.’ definition of a business and of outputs,
following:
and introduce an optional fair value
In the absence of specific guidance concentration test.
• Whether an entity considers uncertain
in IFRS, the company will have to
tax treatments separately
apply judgment in determining the The amendments are applied
incremental borrowing rate. Determining • The assumptions an entity makes prospectively to all business combinations
the incremental borrowing rate is more about the examination of tax and asset acquisitions for which the
complex than simply determining the treatments by taxation authorities acquisition date is on or after the first
weighted rate that an entity pays on its annual reporting period beginning on
• How an entity determines taxable
current borrowings. Such borrowings or after 1 January 2020, with early
profit (tax loss), tax bases, unused
may have economic characteristic entirely application permitted.
tax losses, unused tax credits and tax
dissimilar to the definition of the lessee’s
rates
incremental borrowing rate as noted
above.
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LOLC HOLDINGS PLC
2.13.2 Amendments to LKAS 1 and IAS These accounting policies have been Control over an investee is achieved when
8: Definition of Material applied consistently by entities within the the Group is exposed, or has rights, to
Amendments to LKAS 1 Presentation Group. variable returns from its involvement with
of Financial Statements and IAS 8 the investee and has the ability to affect
Accounting policies, Changes in 3.1 Basis of Consolidation those returns through its power over the
accounting Estimates and Errors are made 3.1.1 Business Combinations investee.
to align the definition of “material” across The Group’s Financial Statements Specifically, the Group controls an investee
the standard and to clarify certain aspects comprise, Consolidated Financial if, and only if, the Group has:
of the definition. The new definition Statements of the Company and its
states that, “information is material if Subsidiaries in terms of the Sri Lanka • Power over the investee (i.e., existing
omitting or obscuring it could reasonably Accounting Standard – SLFRS 10 on rights that give it the current ability
be expected to influence decisions that ‘Consolidated Financial Statements’ and to direct the relevant activities of the
the primary users of general purpose the proportionate share of the profit or loss investee)
financial statements make on the basis of and net assets of its Associates in terms • Exposure, or rights, to variable returns
those financial statements, which provide of the Sri Lanka Accounting Standard – from its involvement with the investee
financial information about a specific LKAS 28 on ‘Investments in Associates
reporting entity. and Joint Ventures’. • The ability to use its power over the
investee to affect its returns
The amendments are applied The Group measures goodwill as the fair
prospectively for the annual periods value of the consideration transferred When the Group has less than a majority
beginning on or after 1 January 2020 with including the recognised amount of any of the voting or similar rights of an
early application permitted. non-controlling interest in the acquiree, investee, the Group considers all relevant
less the net recognised amount (generally facts and circumstances in assessing
2.13.3 Amendments to references to whether it has power over an investee,
fair value) of the identifiable assets
the conceptual framework in including:
acquired and liabilities assumed, all
SLFRS standards
measured as of the acquisition date.
Revisions to the Conceptual Framework • The contractual arrangement with the
When the excess is negative, a bargain
were made because some important other vote holders of the investee;
purchase gain is recognised immediately
issues were not covered and some in Profit or Loss. • Rights arising from other contractual
guidance was unclear or out of date. The
arrangements; and
revised Conceptual Framework includes: The Group elects on a transaction-by-
a new chapter on measurement; guidance transaction basis whether to measure • The Group’s voting rights and
on reporting financial performance; non-controlling interest at its fair value, potential voting rights
improved definitions of an asset and a or at its proportionate share of the
liability, and guidance supporting these recognised amount of the identifiable net The Financial Statements of subsidiaries
definitions; and clarifications in important assets, at the acquisition date. are included in the consolidated Financial
areas, such as the roles of stewardship, Statements from the date that control
prudence and measurement uncertainty in Transaction costs, other than those commences until the date that control
financial reporting. associated with the issue of debt or ceases. Acquisition of subsidiaries is
equity securities, that the Group incurs in accounted for using the acquisition
The amendments are effective for annual connection with a business combination method of accounting.
periods beginning on or after 1 January are expensed as incurred.
2020, with early application is permitted. The accounting policies of subsidiaries
3.1.2 Subsidiaries have been changed where necessary
3. SIGNIFICANT ACCOUNTING Subsidiaries are entities controlled by the to align them with the policies adopted
POLICIES Group. Control exists when the Company by the Group. If a member of the group
The accounting policies set out below has the power, directly or indirectly, to uses accounting policies other than those
have been applied consistently to all govern the financial and operational adopted in the consolidated Financial
periods presented in these Consolidated policies of an entity so as to obtain Statements for similar transactions
Financial Statements unless otherwise benefits from its activities. and events in similar circumstances,
indicated. appropriate adjustments are made to
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LOLC HOLDINGS PLC
its Financial Statements in preparing the made to goodwill recognised and no gain components of equity related to the
consolidated Financial Statements. or loss is recognised in Profit or Loss. subsidiary. Any surplus or deficit arising
on the loss of control is recognised in the
Any goodwill arising on the acquisition 3.1.6 Common Control Transactions Statement of statement of profit or loss.
of a foreign operation and any fair value
Common control business combinations
adjustments to the carrying amounts If the Group retains any interest in the
are accounted using the guidelines issued
of assets and liabilities arising on the previous subsidiary, then such interest
under Statement of Recommended
acquisition are treated as assets and is measured at fair value at the date
Practice (SORP) – Merger accounting for
liabilities of the foreign operation and that control is lost. Subsequently it is
common control business combination
translated at the closing rate. accounted for as an equity-accounted
issued by Institute of Chartered
Accountants of Sri Lanka. investee or as other financial asset
3.1.3 Non-Controlling Interests depending on the level of influence
Non-controlling Interests is the equity in A business combination involving entities retained.
a subsidiary not attributable, directly or or businesses under common control is a
indirectly, to the parent are presented business combination in which all of the 3.1.8 Associates
in the Statement of Financial Position combining entities or businesses ultimately Associates are those entities in which the
within Equity, separately from the Equity are controlled by the same party or parties Group has significant influence, but not
attributable to Shareholders Holders of the both before and after the combination, control, over their financial and operating
Parent (Company). and that control is not transitory. activities. Significant influence is presumed
to exist when the Group holds between
Material NCI of the Group disclosed Accordingly, twenty and fifty percent of the voting
in Note 31.10 and material NCI is power of another entity.
• The net assets of the combining
determined based on Group threshold
entities are consolidated using the
contribution to statement of financial Associates are accounted for using
existing book values.
position. the equity method (equity accounted
• No amount is recognised as goodwill investees) and are initially recognised at
3.1.4 Acquisition of Non-Controlling which arises as a result of difference cost. The Group’s investment in associate
Interests between the consideration and net includes goodwill identified on acquisition,
Subsequent to the acquisition of control, assets acquired. net of any accumulated impairment
any further acquisition of net assets from losses.
non-controlling interest is accounted for as • Comparative amounts in the financial
transactions with owners in their capacity statements are restated if the The Consolidated Financial Statements
as owners. Therefore, no goodwill or gain companies had been combined at the include the Group’s share of the income
on bargain purchase is recognised as a previous Balance sheet date. and expenses and equity movements
result of such transactions. of equity accounted investees, after
• In applying book value accounting, adjustments to align the accounting
Any difference between the amount no entries are recognised in Profit policies with those of the Group, from the
by which the non-controlling interests or Loss; instead, the result of the date that significant influence commences
is adjusted and the fair value of the transaction is recognised in equity until the date that significant influence
consideration paid or received shall be as arising from a transaction with ceases.
recognised directly in equity and attributed shareholders.
to the owners of the parent. Acquisitions of additional stakes of equity
• Comparatives as a stand-alone entity accounted investees, until the control is
as if stood as at 2018/19 has also established, are accounted as goodwill
3.1.5 Transactions do not Result a
been given to aid comparability. within the equity accounted investment
Change in Control
if consideration paid is more than the
Changes in the Group’s interest in a 3.1.7 Loss of Control net asset acquired or taken into to profit
subsidiary that do not result in a loss
The parent can lose control of a subsidiary or loss as gain on bargain purchase if
of control status are accounted for as
with or without a change in absolute or the net asset acquired is more than the
transactions with owners in their capacity
relative ownership levels. Upon the loss consideration paid.
as owners. Adjustments to non-controlling
of control, the Group derecognises the
interests and parent’s equity are based on When the Group’s share of losses
assets and liabilities of the subsidiary,
a proportionate amount of the net assets exceeds its interest in an equity
any minority interests and the other
of the subsidiary. No adjustments are accounted investee, the carrying amount
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LOLC HOLDINGS PLC
of that interest (including any long- and that of the parent does not exceed indication of impairment to ensure that
term investments) is reduced to zero three months. its carrying amount does not exceed the
and the recognition of further losses is recoverable amount. If an impairment loss
discontinued except to the extent that However, for the Group financial reporting is identified, it is recognised immediately
the Group has an obligation or has made purposes; the Financial Statements to the Statement of statement of profit
payments on behalf of the investee. ending 31 March of the above mentioned or loss. For the purpose of impairment
Associate Companies of the Group which subsidiaries and associates are testing, goodwill acquired in a business
have been accounted for under the equity considered. combination is, from the acquisition date,
method of accounting are disclosed under allocated to groups of cash-generating
Note 32.3 to these Financial Statements. 3.1.11 Balances and Transactions units that are expected to benefit from the
Eliminated on Consolidation synergies of the combination.
3.1.9 Jointly-Controlled Entities Intragroup balances and transactions,
Jointly-controlled entities are those entities including income, expenses and The impairment loss is allocated first
over whose activities the Group has dividends, are eliminated in full. Profits to reduce the carrying amount of any
joint control, established by contractual and losses resulting from intragroup goodwill allocated to the unit and then to
agreement and requiring unanimous transactions that are recognised in assets, the other assets pro-rata to the carrying
consent for strategic financial and such as inventory and fixed assets, are amount of each asset in the unit. Where
operating decisions. eliminated in full. goodwill forms part of a cash-generating
unit and part of the operation within
Jointly-controlled entities are accounted Unrealised gains arising from transactions that unit is disposed of, the goodwill
for using equity method, from the date with equity-accounted investees are associated with the operation disposed of
that joint control commences until the date eliminated against the investment to is included in the carrying amount of the
that joint control ceases. the extent of the Group’s interest in the operation when determining the gain or
investee. loss on disposal of the operation.
3.1.10 Reporting Date
3.1.12 Business Combinations Carrying amount of the goodwill arising
All the Group’s Subsidiaries, Associate
All business combinations have been on acquisition of subsidiaries and joint
Companies and joint venture companies
accounted for by applying the acquisition ventures is presented as an intangible and
have a common financial year end
method in accordance with the SLFRS the goodwill on an acquisition of an equity
which ends on 31st March other than
3 - Business Combinations. Applying accounted investment is included in the
Commercial Insurance Brokers Limited,
this method involves the entity that carrying value of the investment.
LOLC General Insurance Limited, LOLC
Life Assurance Limited, LOLC Asset obtains control over the other entity to
recognise the fair value of assets acquired 3.1.15 Gain on Bargain Purchase
Holdings Limited, LOLC International (Pvt)
and liabilities and contingent liabilities (negative goodwill)
Ltd, LOLC (Pvt) Ltd, LOLC Cambodia Plc,
PRASAC Micro Finance Institution Limited, assumed, including those not previously If the Group’s interest in the net fair value
LOLC Asia (Pvt) Ltd, NPH Investments recognised. of the identifiable assets, liabilities and
(Pvt) Ltd, Pak Oman Microfinance Bank contingent liabilities exceeds the cost of
Limited, B Commodities ME (FZE), Browns 3.1.13 Cost of Acquisition the acquisition of the entity, the Group
Machinery (Cambodia) Co., Ltd, LOLC The cost of an acquisition is measured as will reassess the measurement of the
Financial Sector Holdings Private Limited, the fair value of the assets given, equity acquiree’s identifiable assets and liabilities
LOLC MEKONG Holdings Private Limited, instruments issued and liabilities incurred and the measurement of the cost and
Bodufaru Beach Resorts (Private) Limited, or assumed at the date of exchange. This recognise the difference immediately in the
Browns Ari Resort (Pvt) Ltd, Browns excludes any transaction costs incurred. Consolidated Statement of statement of
Kaafu N Resort (Pvt) Ltd, Browns Raa profit or loss.
Resort (Pvt) Ltd, PT LOLC Management 3.1.14 Goodwill on Acquisition
Goodwill represents the excess of the 3.2 Foreign Currency
Indonesia, PT Sarana Sumut Ventura,
NPH Development (Pvt) Ltd, Patronus cost of any acquisition of a subsidiary or 3.2.1 Foreign Currency Transactions
Wealth Holdings Limited, Commercial an associate over the Group’s interest in Transactions in foreign currencies are
Insurance Brokers Limited and Seylan the net fair value of the identifiable assets, translated to the functional currency (Sri
Bank PLC whose financial year ends on liabilities and contingent liabilities acquired. Lankan Rupees - LKR) of the Group
31st December. The difference between at exchange rates at the dates of the
the reporting date of the above companies The Group tests the goodwill for
transactions.
impairment annually and assess for any
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LOLC HOLDINGS PLC
Monetary assets and liabilities Profit or Loss as part of the gain or loss The best evidence of the fair value of a
denominated in foreign currencies at on disposal. If the Group disposes of financial instrument at initial recognition
the reporting date are retranslated to only part of its interest in a subsidiary that is the transaction price, i.e. the fair value
the functional currency at the exchange includes a foreign operation while relating of the consideration given or received,
rate at that date. The foreign currency control, then the relevant proportion of the unless the fair value of that instrument
gain or loss on monetary items are the cumulative amount is attributed to NCI. is evidenced by comparison with other
difference between amortised cost in the observable current market transactions
functional currency at the beginning of If a settlement of a monetary item in the same instrument or based on a
the year, adjusted for effective interest receivable from or payable to a foreign valuation technique whose variables
and payments during the year and operation is neither planned nor likely include only data from observable
the amortised cost in foreign currency in the foreseeable future, the foreign markets. When transaction price provides
translated at the exchange rate at the end currency differences arising on the item the best evidence of fair value at initial
of the year. form part of the net investment in the recognition, the financial instrument is
foreign operation and are recognised in initially measured at the transaction price
Non-monetary assets and liabilities OCI, and accumulated in the translation and any difference between this price and
denominated in foreign currencies that are reserve within equity. the value initially obtained from a valuation
measured at fair value are retranslated to model is subsequently recognised in
the functional currency at the exchange 3.3 Fair Value Measurement Statement of Financial position.
rate at the date that the fair value was Fair value is the amount for which an asset
determined. Non-monetary items in a could be exchanged, or a liability settled, 3.3.1 Valuation of Financial
foreign currency that are measured in between knowledgeable, willing parties Instruments
terms of historical cost are translated in an arm’s length transaction on the The Group measures the fair values using
using the exchange rate at the date of the measurement date. the following fair value hierarchy that
transaction.
reflects the significance of the inputs used
When available, the Group measures
Foreign currency differences arising on in making the measurements.
the fair value of an instrument using
retranslation are recognised in Statement quoted prices in an active market for that Level 1 – Quoted market price
of profit or loss. instrument. A market is regarded as active (unadjusted) in an active market of an
if quoted prices are readily and regularly identical instrument.
3.2.2 The Net Gain or Loss on available and represent actual and
Conversion of Foreign regularly occurring market transactions on Level 2 – Valuation techniques based
Operations an arm’s length basis. on observable inputs, either directly (i.e.,
The assets and liabilities of foreign as prices) or indirectly (i.e., derived from
operations, including goodwill and fair If a market for a financial instrument prices), this category included instruments
value adjustments arising on acquisitions, is not active, the Group establishes valued using: quoted market prices in
are translated into Sri Lanka Rupees (LKR) fair value using valuation techniques. active markets similar instruments; quoted
at spot exchange rates at the reporting Valuation techniques include using prices for identical or similar instruments in
date. The income and expenses of foreign recent arm’s length transactions between markets are considered less than active:
operations are translated into Sri Lanka knowledgeable, willing parties (if available), or other valuation techniques where all
Rupees at spot exchange rates at the reference to the current fair value of other significant inputs are directly observable
dates of the transactions. instruments that are substantially the from market data.
same, discounted cash flow analysis and
Foreign currency differences are other equity pricing models. Level 3 – Valuation techniques use
recognised in OCI, and accumulated in significant unobservable inputs. This
the foreign currency translation reserve The chosen valuation technique makes category includes all instruments where
(Translation reserve), except to the extent maximum use of market inputs, relies as the valuation technique includes inputs
that the translation difference is allocated little as possible on estimates specific to not based on observable data and the
to NCI. the Group, incorporates all factors that unobservable inputs have a significant
market participants would consider in effect on the instrument’s valuation.
When a foreign operation is disposed of setting a price, and is consistent with
such that control is lost, the cumulative accepted economic methodologies for
amount in the translation reserve related pricing financial instruments.
to that foreign operation is reclassified to
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LOLC HOLDINGS PLC
This category includes instruments that contractual provisions of the instrument. on the business model for managing the
are valued based on quoted prices for This includes regular way purchases assets and the asset’s contractual terms,
similar instruments where significant and sale of financial assets. The group measured at either:
unobservable adjustments or assumptions recognises loans and advances, deposits
are required to reflect differences between and subordinated liabilities, etc., on the • Amortised cost.
the instruments. date which they are originated.
• Fair Value through Other
Fair values of financial assets and The classification of financial instruments Comprehensive Income (FVOCI)
financial liabilities that are traded in active at initial recognition depends on their cash
• Fair Value through Profit or Loss
markets are based on quoted market flow characteristics and the business
(FVPL)
prices or dealer price quotations. For all model for managing the instruments as
other financial instruments, the Group described in note 3.4.2.1 and 3.4.2.2 to The subsequent measurement of financial
determines fair values using valuation the financial statements. assets depends on their classification.
techniques
All financial instruments are measured
3.4.2.1 Business model assessment
Valuation techniques include comparison initially at their fair value plus or minus
Under SLFRS 9, The group makes
of similar instruments for which market transaction costs that are directly
an assessment of the objective of a
observable prices exist, other equity attributable to its acquisition or issue,
business model in which an asset is held
pricing models and other valuation except in the case of financial assets and
at a portfolio level due to the fact that
models. financial liabilities recorded at fair value
it best reflects the way the business is
through profit or loss. Trade receivables
The objective of valuation techniques managed and information is provided to
are measured at transaction price as per
is to arrive at a fair value determination management. The information considered
SLFRS 9 which do not have a significant
that reflects the price of the financial includes:
financial component as defined by
instruments at the reporting date that SLFRS 15. When the fair value of financial • the stated policies and objectives
would have been determined by market instruments at initial recognition differs for the portfolio and the operation of
participants acting at arm’s length. from the transaction price, the Group those policies in practice. In particular,
accounts for the ‘Day 1’ profit or loss, as whether Management’s strategy
The Group widely recognised valuation
described below. focuses on earning contractual
models for determining fair value of
common and more simple financial interest revenue, maintaining a
3.4.1.1 “Day 1” profit or loss particular interest rate profile,
instruments. Observable prices and model
inputs are usually available in the market When the transaction price of the matching the duration of the financial
for listed debt and equity securities. instrument differs from the fair value at assets to the duration of the liabilities
Availability of observable market inputs origination and the fair value is based on that are funding those assets or
reduces the need for management a valuation technique using only inputs realising cash flows through the sale
judgment and estimation and also observable in market transactions, the of the assets;
reduces the uncertainty associated with Group recognises the difference between
the transaction price and fair value in other • how the performance of the portfolio
determination of fair values. Availability
income. is evaluated and reported to the
of observable market prices and inputs
Group’s Management;
varies depending on the products and
In those cases, where fair value is
markets are is prone to changes based on • the risks that affect the performance
determined based on models for which
specific events and general conditions in of the business model (and the
some of the inputs are not observable, the
the financial markets. financial assets held within that
difference between the transaction price
and the fair value deferred and is only business model) and its strategy for
3.4 Financial assets and Financial how those risks are managed;
recognised in the statement of profit or
liabilities
loss when the inputs become observable,
3.4.1 Initial recognition or when the instrument is de-recognised. • how managers of the business
are compensated (e.g. whether
All financial assets and liabilities excluding
3.4.2 Classification and Measurement compensation is based on the fair
loans and advances to customers and
of Financial assets value of the assets managed or the
balances due to customers are initially
contractual cash flows collected); and
recognised on the trade date, i.e., the date From 1st January 2018, the group
that the Group becomes a party to the classifies all of its financial assets based
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LOLC HOLDINGS PLC
• the frequency, volume and timing of • prepayment and extension terms; unearned income and deducting pre-paid
sales in prior periods, the reasons rentals, rental collections and impairment
• terms that limit the Group’s claim to
for such sales and its expectations losses.
cash flows from specified assets and
about future sales activity. However,
information about sales activity is not • features that modify consideration 3.4.2.3.2 Rental Receivables on
considered in isolation, but as part of the time value of money (e.g. Operating Leases
of an overall assessment of how the periodical reset of interest rates). Leases where the group as the lessor
Bank’s stated objective for managing effectively retains substantially all the risk
the financial assets is achieved and The Group holds a portfolio of long-term
and rewards incidental to the ownership
how cash flows are realised. fixed-rate loans for which the Group has
are classified as operating leases.
the option to propose to revise the interest
Lease rentals from operating leases are
Financial assets that are held for trading rate at periodic reset dates. These reset
recognised as income on a straight-line
or managed and whose performance rights are limited to the market rate at
basis over the lease term.
is evaluated on a fair value basis are the time of revision. The borrowers have
measured at FVTPL because they are an option to either accept the revised
3.4.2.3.3 Advances and Other Loans to
neither held to collect contractual cash rate or redeem the loan at par without
Customers
flows nor held both to collect contractual penalty. The Group has determined
Advances and other loans to customers
cash flows and to sell financial assets. that the contractual cash flows of these
comprised of revolving loans, loans with
loans are SPPI met because the option
fixed installments, factoring and gold
3.4.2.2 Assessment of whether varies the interest rate in a way that is
loans.
Contractual Cash Flows are consideration for the time value of money,
Solely Payments of Principal credit risk, other basic lending risks and Revolving loans to customers are reflected
and Interest (SPPI) costs associated with the principal amount in the statement of financial position at
As second step to the classification outstanding. amounts disbursed less repayments and
process, the group assess the contractual allowance for impairment losses. Loans
terms of the financial assets to identify 3.4.2.3 Financial assets measured at to customers with fixed installments are
whether they meet the SPPI test. amortised cost stated in the statement of financial position
A financial asset is measured at amortise net of possible loan losses and net of
For the purposes of this assessment, cost if it meets both of the following interest, which is not accrued to revenue.
“principal” is defined as the fair value of conditions and is not designated under
the financial asset on initial recognition. FVTPL, 3.4.2.3.4 Gold Loans
“Interest” is defined as consideration for
The Group provides gold loan facilities
the time value of money and for the credit • The asset is held within a business
with different maturities which are less
risk associated with the principal amount model whose objectives is to hold
than one year. The amounts receivables
outstanding during a particular period of assets to collect contractual cash
from Gold loans are included in the
time and for other basic lending risks and flows; and
advances and other loans at the amounts
costs (e.g. liquidity risk and administrative
• The contractual terms of the financial expect to be recovered.
costs), as well as profit margin.
asset give rise on specified dates to
In assessing whether the contractual cash cash flows that are solely payment of 3.4.2.3.5 Trade Receivables
flows are SPPI, the group considers the principal and interest on the principal Trade receivables are stated at the
contractual terms of the instruments. This amount outstanding. amounts they are estimated to realise, net
includes assessing whether the financial of provisions for impairment. An allowance
asset contains a contractual term that Financial assets measure at amortised for impairment losses based on expected
could change the timing or contractual cost are given in notes 21 and 54.2. credit loss model at the time of origination
cash flows such that it would not meet this and when there is a significant increase in
condition. In making the assessment the 3.4.2.3.1 Rental Receivables on Finance credit risk.
Group considers: Leases and Hire purchases
Rentals receivable on leased and hire 3.4.2.3.6 Cash and cash equivalents
• contingent events that would change purchase assets are accounted for Cash and cash equivalents include cash
the amount and timing of cash flows; as finance leases and reflected in the in hand, placements with banks and
• leverage features; statement of financial position at balance loans at call and at short notice that are
cost recoverable after eliminating
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subject to an insignificant risk of changes assets that are held for trading or Life-time ECL are the ECL that result
in their fair value, and are used by the managed and whose performance is from all possible default events over the
Bank in the management of its short-term evaluated on a fair value basis. expected life of the financial instrument.
commitments. Cash and cash equivalents Financial instruments for which a lifetime
are carried at amortised cost in the 3.4.3 Identification and measurement ECL is recognised but which are not
Statement of Financial Position. of impairment of financial assets credit-impaired are referred to as “Stage 2
3.4.3.1 Recognition of expected credit financial instruments”.
Cash and cash equivalents comprise of
loss
cash in hand and cash at banks and other 3.4.3.2 Measurement of ECL
highly liquid financial assets which are held The Group recognises loss allowances
ECL are a probability-weighted estimate
for the purpose of meeting short-term for Expected Credit Losses (ECL) on the
of credit losses. They are measured as
cash commitments with original maturities following financial instruments that are not
follows:
of less than three months which are measured at FVTPL:
subject to insignificant risk of changes in – financial assets that are not credit
– lease and other loan receivables;
their fair value. impaired at the reporting date: as the
– financial assets that are debt present value of all cash shortfalls (i.e,
Bank overdrafts that are repayable on
instruments; the difference between the cash flows
demand and form an integral part of
due to the entity in accordance with
the Group cash management and are – undrawn credit commitments. the contract and the cash flows that
included as a component of cash and
the Group expects to receive);
cash equivalents for the purpose of the No impairment loss is recognised on
Statement of Cash Flows. equity investments. – financial assets that are credit
impaired at the reporting date: as the
3.4.2.4 Financial assets measure at The Group measures loss allowances at
difference between the gross carrying
FVOCI an amount equal to lifetime ECL, except
amount and the present value of
for the following, for which they are
Financial assets measured at FVOCI estimated future cash flows;
measured as 12-month ECL:
include debt and equity instruments
measured at fair value through other – undrawn loan commitments: as
– debt investment securities that are
comprehensive income. the present value of the difference
determined to have low credit risk at
between the contractual cash flows
the reporting date; and
Debt instruments are measured at FVOCI that are due to the Group if the
if they are held within a business model – other financial instruments on commitment is drawn down and the
whose objective is to hold for collection which credit risk has not increased cash flows that the Group expects to
of contractual cash flows and for selling significantly since their initial receive; and
financial assets, where the asset’s cash recognition.
flows represent payments of principal and 3.4.3.3 Restructured financial assets
interest. The Group considers a debt investment If the terms of a financial asset are
security to have low credit risk when renegotiated or modified or an existing
Upon initial recognition, the group elected its credit risk rating is equivalent to the financial asset is replaced with a new one
to apply irrevocable option for some of its definition of “investment grade”. The due to financial difficulties of the borrower,
equity investments held for strategic and Group does not apply the low credit then an assessment is made of whether
statutory purposes as equity instruments risk exemption to any other financial the financial asset should be derecognised
at FVOCI. instruments. and ECL are measured as follows:
3.4.2.5 Financial assets measure at 12-month ECL are the portion of ECL that – If the expected restructuring will not
FVTPL result from default events on a financial result in derecognition of the existing
As per SLFRS 9, all financial assets other instrument that are possible within the 12 asset, then the expected cash flows
than those classified at amortise cost months after the reporting date. Financial arising from the modified financial
or FVOCI are classified and measure instruments for which a 12-month ECL asset are included in calculating
at FVTPL. Financial assets at fair value is recognised are referred to as “Stage 1 the cash shortfalls from the existing
through profit and loss include financial financial instruments”. asset.
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LOLC HOLDINGS PLC
– If the expected restructuring will other indicators of impairment. In addition, • Financial liabilities at amortised cost;
result in derecognition of the existing a loan that is past due for a period more and
asset, then the expected fair value of than 180 days or classified as non-
the new asset is treated as the final performing under CBSL Direction No. 03 • Financial liabilities at fair value through
cash flow from the existing financial of 2008 is considered credit-impaired. profit or loss,
asset at the time of its derecognition.
The subsequent measurement of financial
This amount is included in 3.4.3.5 Presentation of ECL in the
liabilities depends on their classification.
calculating the cash shortfalls from statement of financial position
the existing financial asset that are Loss allowances for ECL are presented 3.4.4.1 Financial liabilities at amortised
discounted from the expected date in the Statement of Financial Position as cost
of derecognition to the reporting date follows:
Financial Liabilities issued by the Group
using the original effective interest
– financial assets measured at that are not designated at fair value
rate of the existing financial asset.
amortised cost: as a deduction from through profit or loss are recognised
the gross carrying amount of the initially at fair value plus any directly
3.4.3.4 Credit impaired financial assets
assets; attributable transaction costs, by taking
At each reporting date, the Group
into account any discount or premium on
assesses whether financial assets carried
– loan commitments and financial acquisition and fees or costs that are an
at amortised cost and debt financial
guarantee contracts: as a provision integral part of the EIR.
assets carried at FVOCI, and finance lease
under other liabilities; – debt
receivables are credit-impaired (referred to Subsequent to initial recognition these
instruments measured at FVOCI:
as “Stage 3 financial assets”). A financial financial liabilities are measured at
no loss allowance is recognised in
asset is “credit-impaired” when one or amortised cost using the effective interest
the Statement of Financial Position
more events that have a detrimental method. Deposit liabilities including
because the carrying amount of these
impact on the estimated future cash flows savings deposits, current deposits, fixed/
assets is their fair value.
of the financial asset have occurred. time deposits, call deposits, certificates of
3.4.3.6 Write off deposit and debentures are classified as
Evidence that a financial asset is credit-
Loans and debt securities are written off financial liabilities measured at amortised
impaired includes the following observable
(either partially or in full) when there is no cost.
data:
reasonable expectation of recovering a
The EIR amortisation is included in
– significant financial difficulty of the financial asset in its entirety or a portion
“Interest expense” in the income
borrower or issuer thereof. This is generally the case when
statement. Gains and losses too are
the Group determines that the borrower
– a breach of contract such as a default recognised in the income statement when
does not have assets or sources of
or past due event; the liabilities are derecognised as well as
income that could generate sufficient cash
through the EIR amortisation process.
– the restructuring of a loan or advance flows to repay the amounts subject to the
by the Group on terms that the Group write-off. This assessment is carried out at 3.4.4.1.1 Due to banks and other
would not consider otherwise; the individual asset level. financial institutions
Recoveries of amounts previously written Due to banks and other financial
– it is becoming probable that the
off are included in “impairment losses on institutions These represents refinance
borrower will enter bankruptcy or
financial instruments” in the Statement of borrowings, called money borrowings,
other financial reorganisation; or
Profit or Loss and OCI. Financial assets credit balances in Nostro Accounts and
– the disappearance of an active that are written off could still be subject to borrowings from financial institutions.
market for a security because of enforcement activities in order to comply Subsequent to initial recognition deposits
financial difficulties. with the Group’s procedures for recovery are measured at their amortised cost using
of amounts the EIR method. Interest paid/payable on
A loan that has been renegotiated due to these borrowings is recognised in profit
a deterioration in the borrower’s condition 3.4.4 Financial Liabilities or loss.
is usually considered to be credit-impaired On initial recognition, the Group classifies
unless there is evidence that the risk of 3.4.4.1.2 Due to customers
financial liabilities, other than financial
not receiving contractual cash flows has guarantees and loan commitments, into Due to customers includes non-interest-
reduced significantly and there are no one of the following categories: bearing deposits, savings deposits, term
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deposits, deposits payable at call and income and presented in the hedging 3.4.5.1.3 Derivatives that do not qualify
certificates of deposit. Subsequent to reserve in equity. Any gain or loss in fair for Hedge Accounting
initial recognition deposits are measured at value relating to an ineffective portion is All gains and losses from changes in the
their amortised cost using the EIR method, recognised immediately in the Profit or fair values of derivatives that do not qualify
except where the Bank designates Loss during that period. The accumulated for hedge accounting are recognised
liabilities at fair value through profit or loss. gains and losses recognised in other immediately in the Profit or Loss.
Interest paid/ payable on these deposits is comprehensive income are reclassified
recognised in profit or loss. to the statement of profit or loss in the 3.4.6 Fair Value Measurement
periods in which the hedged item will Fair value is the amount for which an asset
3.4.4.2 Financial liabilities at fair value affect Profit or Loss. could be exchanged, or a liability settled,
through profit or loss between knowledgeable, willing parties
Financial liabilities at fair value through If the hedge instrument no longer meets
in an arm’s length transaction on the
profit or loss include derivative liabilities the criteria for hedge accounting, expires
measurement date.
held for risk management purposes. or is sold, terminated or exercised, or
the designation is revoked, then hedge When available, the Group measures
3.4.5 Accounting for Derivative accounting is discontinued prospectively. the fair value of an instrument using
Financial Instruments In such a case, the cumulative gain or quoted prices in an active market for that
loss on the hedging instrument that has instrument. A market is regarded as active
Derivatives are initially recognised
been recognised in other comprehensive if quoted prices are readily and regularly
at fair value on the date on which a
income from the period when the hedge available and represent actual and
derivative contract is entered into and
was effective shall remain separately in regularly occurring market transactions on
are subsequently re-measured at their
equity until the forecasted transaction an arm’s length basis.
fair value. Fair values are obtained from
occurs.
quoted market prices in active markets. All
If a market for a financial instrument
derivatives are carried as assets when the
3.4.5.1.2 Hedge Effectiveness Testing is not active, the Group establishes
fair value is positive and as liabilities when
To qualify for hedge accounting, at the fair value using valuation techniques.
the fair value is negative.
inception of the hedge and throughout Valuation techniques include using
its life, each hedge must be expected recent arm’s length transactions between
3.4.5.1 Hedge Accounting
to be highly effective and demonstrate knowledgeable, willing parties (if available),
The Group holds derivative financial
actual effectiveness on an on-going basis. reference to the current fair value of other
instruments to hedge its foreign currency
The documentation of each hedging instruments that are substantially the
risk exposure. On initial designation of
relationship sets out how the effectiveness same, discounted cash flow analysis and
derivative as hedge instrument, the Group
of the hedge is assessed. other equity pricing models.
documents the relationship between the
hedging instruments and the hedged For establish effectiveness, the hedging The chosen valuation technique makes
items, its risk management objective and instrument is expected to be highly maximum use of market inputs, relies as
its strategy for undertaking the hedge. effective in offsetting changes in cash little as possible on estimates specific to
flows attributable to the hedged risk the Group, incorporates all factors that
Group treasury is also required to
during the period for which the hedge is market participants would consider in
documented assessments, both at hedge
designated. For actual effectiveness to setting a price, and is consistent with
inception and on an on-going basis, of
be achieved, the changes in cash flows accepted economic methodologies for
whether or not the hedging instruments,
must offset each other within the range pricing financial instruments.
primarily forward rate contracts, that
of 80% to 125%. In evaluating the hedge
are used in hedging transactions are The best evidence of the fair value of a
effectiveness, the entity takes into account
highly effective in offsetting the changes financial instrument at initial recognition
the future forward currency contracts and
attributable to the hedged risks in the fair is the transaction price, i.e. the fair value
evaluates the effectiveness of the hedge
values or cash flows of the hedged items. of the consideration given or received,
by taking into consideration the total
unless the fair value of that instrument
period of the hedged item. The ineffective
3.4.5.1.1 Cash Flow Hedge is evidenced by comparison with other
portion of the derivative portion will be
The effective portion of changes in the fair observable current market transactions
recognised immediately in Statement
value of derivatives that are designated in the same instrument or based on a
Comprehensive Income.
and qualify as cash flow hedges as valuation technique whose variables
recognised in other comprehensive include only data from observable
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markets. When transaction price provides The Group did not reclassify any of its 3.4.8.2 Financial liabilities
the best evidence of fair value at initial financial assets or liabilities in 2019 /20. A financial liability is derecognised
recognition, the financial instrument is when the obligation under the liability
initially measured at the transaction price 3.4.8 Derecognition of financial is discharged or cancelled or expires.
and any difference between this price and assets and financial liabilities Where an existing financial liability is
the value initially obtained from a valuation 3.4.8.1 Financial assets replaced by another from the same
model is subsequently recognised in lender on substantially different terms,
A financial asset (or, where applicable a
Statement of Financial position. or the terms of an existing liability are
part of a financial asset or part of a group
of similar financial assets) is derecognised substantially modified, such an exchange
3.4.7 Reclassification of Financial or modification is treated as derecognition
when:
Assets and Liabilities of the original liability and the recognition
Financial assets are not reclassified • The rights to receive cash flows from of a new liability. The difference between
subsequent to their initial recognition, the asset have expired. the carrying value of the original financial
except and only in those rare liability and the consideration paid is
circumstances when the Group changes • The Group has transferred its rights recognised in profit or loss.
its objective of the business model for to receive cash flows from the asset
managing such financial assets. Financial or has assumed an obligation to pay 3.4.9 Modification of Financial assets
Liabilities are not reclassified as such the received cash flows in full without and Financial Liabilities
reclassifications are not permitted by material delay to a third party under
3.4.9.1 Financial assets
SLFRS 9. a ‘pass–through’ arrangement; and
either: If the terms of a financial asset are
If a financial asset is reclassified out of the modified, then the Group evaluates
amortised cost measurement category • The Group has transferred whether the cash flows of the modified
and into the fair value through profit or substantially all the risks and rewards asset are substantially different.
loss measurement category, its fair value of the asset, or
If the cash flows are substantially different,
is measured at the reclassification date.
• The Group has neither transferred then the contractual rights to cash flows
Any gain or loss arising from a difference
nor retained substantially all the risks from the original financial asset are
between the previous amortised cost
and rewards of the asset, but has deemed to have expired. In this case, the
of the financial asset and fair value is
transferred control of the asset. original financial asset is derecognised
recognised in statement of profit or loss.
and a new financial asset is recognised
When the Group has transferred its at fair value plus any eligible transaction
If the reclassification takes place out
rights to receive cash flows from an costs. Any fees received as part of the
of the fair value through profit or loss
asset or has entered into a pass– modification are accounted for as follows:
category into the amortised cost
through arrangement, and has neither
measurement category, its fair value at
transferred nor retained substantially all • fees that are considered in
the reclassification date becomes the new
the risks and rewards of the asset nor determining the fair value of the
gross carrying amount.
transferred control of the asset, the asset new asset and fees that represent
If the reclassification takes place out of the is recognised to the extent of the Group’s reimbursement of eligible transaction
amortised cost measurement category continuing involvement in the asset. In costs are included in the initial
and into the fair value through other that case, the Group also recognises an measurement of the asset; and
comprehensive income measurement associated liability. The transferred asset
and the associated liability are measured • other fees are included in profit or
category, fair value is measured at the
on a basis that reflects the rights and loss as part of the gain or loss on
reclassification date. Any gain or loss
obligations that the Group has retained. derecognition.
arising from a difference between the
previous amortised cost of the financial Continuing involvement that takes the
If cash flows are modified when the
asset and fair value is recognised in other form of a guarantee over the transferred
borrower is in financial difficulties, then
comprehensive income. The effective asset is measured at the lower of the
the objective of the modification is usually
interest rate and the measurement of original carrying amount of the asset and
to maximise recovery of the original
expected credit losses are not adjusted as the maximum amount of consideration
contractual terms rather than to originate
a result of the reclassification. that the Bank could be required to repay.
a new asset with substantially different
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terms. If the Bank plans to modify a assumption of liabilities, including the new are presented gross in statement of
financial asset in a way that would result modified financial liability. financial position.
in forgiveness of cash flows, then it
first considers whether a portion of the If the modification of a financial liability 3.5 Inventories
asset should be written off before the is not accounted for as derecognition,
Inventories are measured at the lower of
modification takes place (refer write-off then the amortised cost of the liability is
cost and net realisable value.
policy). This approach impacts the result recalculated by discounting the modified
of the quantitative evaluation and means cash flows at the original effective The cost of inventories is based on the
that the derecognition criteria are not interest rate and the resulting gain or first-in first-out principle, and includes
usually met in such cases. loss is recognised in profit or loss. For expenditure incurred in acquiring the
floating-rate financial liabilities, the original inventories, production or conversion
If the modification of a financial asset effective interest rate used to calculate costs and other costs incurred in bringing
measured at amortised cost or FVOCI the modification gain or loss is adjusted them to their existing location and
does not result in derecognition of to reflect current market terms at the condition.
the financial asset, then the Bank first time of the modification. Any costs and
recalculates the gross carrying amount fees incurred are recognised as an In the case of manufactured inventories
of the financial asset using the original adjustment to the carrying amount of the and work in progress, cost includes an
effective interest rate of the asset and liability and amortised over the remaining appropriate share of production overheads
recognises the resulting adjustment as term of the modified financial liability by based on normal operating capacity. Net
a modification gain or loss in profit or recomputing the effective interest rate on realisable value is the estimated selling
loss. For floating-rate financial assets, the instrument. price in the ordinary course of business,
the original effective interest rate used to less the estimated costs of completion
calculate the modification gain or loss is 3.4.10 Offsetting financial instruments and selling expenses.
adjusted to reflect current market terms at Financial assets and financial liabilities are
For manufacturing stocks, provision for
the time of the modification. Any costs or offset and the net amount reported in the
slow moving inventories are made when
fees incurred and fees received as part of statement of financial position if, and only
the holding period exceeds 365 days,
the modification adjust the gross carrying if, there is a currently enforceable legal
and the sale of the inventories is no longer
amount of the modified financial asset and right to offset the recognised amounts
probable.
are amortised over the remaining term of and there is an intention to settle on a net
the modified financial asset. basis, or to realise the asset and settle the The cost incurred in bringing inventories
liability simultaneously. This is not generally to its present location and condition
If such a modification is carried out
the case with master netting agreements, is accounted using the following cost
because of financial difficulties of
therefore, the related assets and liabilities formula:
the borrower, then the gain or loss is
presented together with impairment
Type of Inventory Method of Valuation
losses. In other cases, it is presented
as interest income calculated using the Input Materials Weighted Average basis
effective interest rate method. Growing Crop - Nurseries At the cost of direct materials, direct labour and
appropriate proportion of directly attributable overheads
3.4.9.2 Financial Liabilities less provision for over-grown plants
The Group derecognises a financial Harvested Crop Agricultural produce harvested from an entity’s biological
liability when its terms are modified and assets shall be measured at its fair value less costs to sell
the cash flows of the modified liability are at the point of harvest. Such measurement is deemed to
substantially different. In this case, a new be the cost at the time of transferring the harvested crop to
financial liability based on the modified inventories.
terms is recognised at fair value. The Spares and Weighted average basis
difference between the carrying amount Consumables
of the financial liability derecognised and
Finished goods and First in First out (FIFO) basis
consideration paid is recognised in profit
work-in-progress
or loss. Consideration paid includes non-
financial assets transferred, if any, and the
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LOLC HOLDINGS PLC
3.5 Investment Properties Transfers are made from investment 3.6 Intangible Assets
3.5.1 Basis of Recognition property when, and only when, there
3.6.1 Basis of Recognition
is a change in use, evidenced by
Investment property is the property held An intangible asset is recognised if it is
commencement of owner occupation or
either to earn rental income or for capital probable that future economic benefits
commencement of development with a
appreciation or for both, but not for sale in that are attributable to the assets will flow
view to sale.
the ordinary course of business, use in the to the entity and the cost of the assets can
production or supply of goods or services For a transfer from investment property to be measured reliably.
or for administrative purposes. owner occupied property or inventories,
the deemed cost of property for 3.6.2 Basis of Measurement
3.5.2 Basis of Measurement subsequent accounting is its fair value Intangible assets acquired separately
3.5.2.1 Fair Value Model at the date of change in use. If the are measured as initial recognition
Investment properties are initially property occupied by the Company as at cost. Following initial recognition
recognised at cost. Subsequent to initial an owner occupied property becomes intangible assets are carried at cost
recognition the investment properties are an investment property, the Company, less any accumulated amortisation and
stated at fair value, which reflect market accounts for such property in accordance any accumulated impairment losses.
conditions at the reporting date. Gains or with the policy stated under property, plant The useful life of intangible assets are
losses arising from changes in fair value and equipment up to the date of change assessed to be either finite or indefinite.
are included in the Statement of statement in use. Intangible assets with finite useful life are
of profit or loss in the year in which they amortised over the useful economic life
For a transfer from inventories to and assessed for impairment whenever
arise.
investment property, any difference there is an indication that the intangible
Where Group companies occupy a between the fair value of the property asset may be impaired. The amortisation
significant portion of the investment at that date and its previous carrying period and the method for an intangible
property of a subsidiary, such investment amount is recognised in the Statement asset with a finite useful life is reviewed at
properties are treated as property, plant of statement of profit or loss. When the least at each financial year end. Intangible
and equipment in the Consolidated Company completes the construction assets with indefinite useful lives are tested
Financial Statements, and accounted or development of a self-constructed for impairment annually either individually
for as per LKAS 16- Property, Plant and investment property, any difference or at the cash generating unit level.
Equipment. between the fair value of the property
at that date and its previous carrying 3.6.3 Subsequent Expenditure
3.5.2.2 De-recognition amount is recognised in the Statement of Subsequent expenditure on intangible
Investment properties are de-recognised statement of profit or loss. assets are capitalised only when it
when either they have been disposed increases the future economic benefits
of or when the investment property is 3.5.2.4 Determining Fair Value embodied these assets. All other
permanently withdrawn from use and no External and independent valuers, having expenditure is expensed when incurred.
future economic benefit is expected from appropriate recognised professional
its disposal. Any gains or losses on the qualifications and recent experience in the 3.6.4 De-recognition
retirement or disposal of an investment location and category of property being Intangible assets are de-recognised on
property are recognised in the Statement valued, values the investment property disposal or when no future economic
of statement of profit or loss in the year of portfolio as at each reporting date. In benefits are expected from its use. The
retirement or disposal. financial periods within that period the gain or loss arising from de-recognition
fair value is determined by the Board of of intangible assets are measured as
3.5.2.3 Subsequent Transfers to/from Directors. the difference between the net disposal
Investment Property proceeds and the carrying amount of the
The fair values are based on market
Transfers are made to investment asset.
values, being the estimated amount for
property when, and only when, there is
which a property could be exchanged
a change in use, evidenced by the end 3.6.5 Amortisation
on the date of the valuation between a
of owner occupation, commencement Amortisation is recognised in the
willing buyer and a willing seller in an arm’s
of an operating lease to another party Statement of statement of profit or loss
length transaction after proper marketing
or completion of construction or on a straight-line basis over the estimated
wherein the parties had each acted
development. useful life of intangible assets, other than
knowledgeably.
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LOLC HOLDINGS PLC
goodwill, from the date that they are they are accounted for as separate items recognised in Profit or Loss as incurred.
available for use. of property, plant and equipment.
3.7.1.6 Reclassification to Investment
The estimated useful life of each intangible 3.7.1.3 Cost Model Property
asset is as follows;
The Group applies the cost model to all When the use of a property changes from
property, plant and equipment except owner-occupied to investment property,
Computer Software 5 years
freehold land and buildings; which is the property is re-measured to fair value
License and Fees 20 years recorded at cost of purchase together and reclassified as investment property.
Customer Base 5 years with any incidental expenses thereon Any gain arising on re-measurement is
Brand Name 10 years less any accumulated depreciation and recognised in Profit or Loss to the extent
accumulated impairment losses. that it reverses a previous impairment
Right to generate solar 20 years
loss on the specific property, with any
power
3.7.1.4 Revaluation Model remaining gain recognised and presented
Amortisation methods, useful lives and The Group revalues its land and buildings in the revaluation reserve in equity. Any
residual values are reviewed at each which are measured at its fair value loss is recognised immediately in Profit or
reporting date and are adjusted as at the date of revaluation less any Loss.
appropriate. subsequent accumulated depreciation
and accumulated impairment losses. 3.7.1.7 Depreciation
3.7 Property, Plant and Equipment Revaluations are made with sufficient Depreciation is based on the cost of an
regularity to ensure that the carrying asset less its residual value. Significant
3.7.1 Freehold Property, Plant &
amount does not differ materially from components of individual assets are
Equipment
that which would be determined using fair assessed and if a component has a useful
3.7.1.1 Basis of Recognition value at the reporting date. life that is different from the remainder of
Property, plant and equipment are that asset, that component is depreciated
recognised if it is probable that future On revaluation of lands and buildings, separately.
economic benefits associated with the any increase in the revaluation amount
assets will flow to the Group and cost of is credited to the revaluation reserve in Depreciation is recognised in Profit or Loss
the asset can be reliably measured. shareholder’s equity unless it off sets on a straight-line basis over the estimated
a previous decrease in value of the useful life of each component of an item
3.7.1.2 Basis of Measurement same asset that was recognised in the of property, plant and equipment. Leased
Items of property, plant and equipment Statement of statement of profit or loss. assets are depreciated over the shorter of
are measured at cost/revaluation A decrease in value is recognised in the the lease term and their useful lives unless
less accumulated depreciation and Statement of statement of profit or loss it is reasonably certain that the Group will
accumulated impairment losses. where it exceeds the increase previously obtain ownership by the end of the lease
recognised in the revaluation reserve. term. Land is not depreciated.
Cost includes expenditure that is directly Upon disposal, any related revaluation
attributable to the acquisition of the reserve is transferred from the revaluation Depreciation of an asset begins when it is
asset. The cost of self-constructed assets reserve to retained earnings and is not available for use and ceases at the earlier
includes the cost of materials and direct taken into account in arriving at the gain or of the date that the asset is classified as
labour, any other costs directly attributable loss on disposal. held for sale and the date that the asset is
to bringing the asset to a working de-recognised.
condition for their intended use, the costs 3.7.1.5 Subsequent Costs
Depreciation methods, useful life values
of dismantling and removing the items and The cost of replacing part of an item
are assessed at the reporting date. The
restoring the site at which they are located of property, plant and equipment is
estimated useful lives for the current year
and capitalised borrowing costs. recognised in the carrying amount of
are as follows:
the item if it is probable that the future
Purchased software that is integral to the economic benefits embodied within the Free-hold and lease-hold 40-50
functionality of the related equipment is part will flow to the Group and its cost can Building years
capitalised as part of that equipment. be measured reliably. The carrying amount
Free-hold and lease-hold 4-8 years
of the replaced part is de-recognised.
When parts of an item of property, plant Motor Vehicles
The costs of the day-to-day servicing
and equipment have different useful lives, Furniture and Fittings 5-10 years
of property, plant and equipment are
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LOLC HOLDINGS PLC
Office Equipment 4-8 years directly incurred in the construction of except to the extent that it relates to
properties. items recognised directly in the Statement
Computer equipment 4-8 years
of Other Comprehensive Income or
Plant and Machinery 8-20 years 3.8 Impairment of Non-Financial Statement of Changes in Equity.
Water Sanitation 20 years Assets
Roads & Bridges 50 years The carrying amounts of the Group’s 3.9.1 Current Tax
Penstock Pipes 20 years non-financial assets are reviewed at each Current tax is the expected tax payable
reporting date to determine whether or recoverable on the taxable income or
Power/Electricity Supply 04-13 1/3
there is any indication of impairment. loss for the year, using tax rates enacted
years
If any such indication exists, then the or substantively enacted at the reporting
Security fencing 3 years asset’s recoverable amount is estimated. date, and any adjustment to tax payable
Cutlery, Crockery & 5 years An impairment loss is recognised if the in respect of previous years. Current tax
Glassware 5 years carrying amount of an asset or its related payable also includes any tax liability
Linen 3 years Cash-Generating Unit (CGU) exceeds its arising from the tax on dividend income.
estimated recoverable amount.
Swimming pool 10 years The provision for income tax is based on
Solar power plant 10-20 The Group’s corporate assets do not the elements of income and expenditure
years generate separate cash inflows and as reported in the Financial Statements
are utilised by more than one CGU. and computed in accordance with the
3.7.1.8 De-recognition Corporate assets are allocated to CGUs provisions of the Inland Revenue Act. No
An item of property, plant and equipment on a reasonable and consistent basis and 10 of 2006 and subsequent amendments
is de-recognised upon disposal or when tested for impairment as part of the testing thereto.
no future economic benefits are expected of the CGU to which the corporate asset
from its use or disposal. is allocated. Current tax assets and liabilities for the
current and prior periods are measured
The gain or loss on disposal of an item Impairment losses are recognised in Profit at the amount expected to be recovered
of property, plant and equipment is or Loss. Impairment losses recognised from or paid to the Commissioner General
determined by comparing the proceeds in respect of CGUs are allocated first of Inland Revenue.
from disposal with the carrying amount to reduce the carrying amount of any
of the property, plant and equipment, goodwill allocated to the CGU (group of 3.9.2 Deferred Tax
recognised net within other income/ CGUs), and then to reduce the carrying Deferred tax is recognised in respect
other expenses in the Statement of amounts of the other assets in the CGU of temporary differences between the
Comprehensive Income. When revalued (group of CGUs) on a pro rata basis. carrying amounts of assets and liabilities
assets are sold, the amounts included for financial reporting purposes and the
in the revaluation surplus reserve are Impairment losses recognised in prior
amounts used for taxation purposes.
transferred to retained earnings. periods are assessed at each reporting
Deferred tax is not recognised for:
date for any indications that the loss
3.7.2 Leasehold Property, Plant & has decreased or no longer exists. An • Temporary differences on the initial
Equipment (Assets Acquired on impairment loss is reversed if there has recognition of assets or liabilities in
Finance Leases) been a change in the estimates used to a transaction that is not a business
determine the recoverable amount. An combination and that affects neither
Leases in terms of which the Group
impairment loss is reversed only to the accounting nor taxable Profit or Loss;
assumes substantially obtained all the
extent that the asset’s carrying amount
risks and rewards of ownership are
does not exceed the carrying amount • Temporary differences related to
classified as finance leases. Assets
that would have been determined, net of investments in subsidiaries and jointly
acquired by way of a finance lease are
depreciation, if no impairment loss had controlled entities to the extent that it
stated at an amount equal to the lower
been recognised. is probable that they will not reverse
of their fair value and the present value of
in the foreseeable future; and
minimum lease payments at the inception
3.9 Tax Expense
less accumulated depreciation. • Taxable temporary differences arising
Tax expense comprises of current,
on the initial recognition of goodwill.
3.7.3 Capital Work-in-Progress deferred tax and other statutory taxes.
Income tax expense is recognised in • Taxable temporary differences arising
Capital work-in-progress is stated at cost.
Statement of statement of profit or loss on subsidiaries, associates or joint
These are expenses of a capital nature
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ventures who have not distributed Deferred Tax shall not be considered nor for set off against the tax liability of the
their entire profits to the parent or provided for assets/liabilities for which tax Company. Withholding tax that arises
investor. impacts and reversals take place within from the distribution of dividends by the
the tax exemption period. There will be no Company is recognised at the same time
Deferred tax is measured at the tax tax implications that take place after the as the liability to pay the related dividend is
rates that are expected to be applied to expiration of the tax exemption period for recognised.
temporary differences when they reverse, such assets.
based on the laws that have been enacted 3.9.4 Economic Service Charge (ESC)
or substantively enacted by the reporting Where a Company is entitled to claim As per the provisions of Economic
date. the total value or any part of expenditure Service Charge Act No. 13 of 2006 and
made during the tax holiday period, as subsequent amendments thereto, ESC is
Deferred tax assets and liabilities are deductions for tax purposes after the tax payable on the liable turnover at specified
offset if there is a legally enforceable right holiday period, such an entity will treat rates. ESC is deductible from the income
to offset current tax liabilities and assets, such amount of expenditure as part of the tax liability. Any unclaimed amount can
and they relate to income taxes levied tax base throughout the tax holiday period be carried forward and set off against the
by the same tax authority on the same in the purpose of recognising deferred tax. income tax payable in the five subsequent.
taxable entity, or on different tax entities, With the recent amendments, Economic
but they intend to settle current tax 3.9.2.2 Deferred Tax on Undistributed Service Charge (ESC) was abolished w.e.f.
liabilities and assets on a net basis or their Profits of Equity Accounted 01st January 2020.
tax assets and liabilities will be realised Investees
simultaneously. 3.9.5 Nation Building Tax (NBT)
The Group does not control its equity
A deferred tax asset is recognised for accounted investees. It is therefore As per the provisions of the Nation
unused tax losses, tax credits and generally not in a position to control Building Tax Act, No. 9 of 2009 and the
the timing of the reversal of a possible subsequent amendments thereto, Nation
deductible temporary differences, to the
taxable temporary difference relating to Building Tax should be payable at the rate
extent that it is probable that future taxable
the undistributed profits of the equity of 2% with effect from 1 January 2011 on
profits will be available against which they
accounted investees. the liable turnover as per the relevant. With
can be utilised. Deferred tax assets are
the recent amendments, Nation Building
reviewed at each reporting date and are
The Group calculates deferred tax based Tax (NBT) was abolished w.e.f. 01st
reduced to the extent that it is no longer
on the most likely manner of reversal, January 2020.
probable that the related tax benefits will
taking into account management’s intent
be realised.
and the tax jurisdiction applicable to 3.9.6 Value Added Tax on Financial
Deferred tax assets and liabilities are not relevant equity accounted investees. Services (VAT on FS)
discounted. VAT on Financial Services is calculated
The management intends to recover
in accordance with the amended VAT
the carrying amount of the investment
The net increase in the carrying amount Act No. 7 of 2003 and subsequent
primarily through sale of the investment
of deferred tax liability net of deferred amendments thereto. The base for the
rather than through dividends. The
tax asset is recognised as deferred tax computation of VAT on Financial Services
deferred tax implications are evaluated
expense and conversely any net decrease is the accounting profit before income tax
based on the tax consequences on the
is recognised as reversal to deferred tax adjusted for the economic depreciation
sale of investments.
expense, in the Statement of statement of and emoluments of employees. VAT on
profit or loss. Since the carrying amount is expected to financial services is computed on the
be recovered through a sale transaction prescribed rate of 15%.
3.9.2.1 Accounting for Deferred Tax for which has no tax consequences, no
the Companies Enjoying Tax temporary difference arises on the equity 3.9.7 Sales Taxes (Value Added Tax
Holidays accounted investees and no deferred tax and Turnover Tax)
Group companies enjoying a tax is provided. Revenues, expenses and assets are
exemption period shall only recognise recognised net of the amount of sales tax
deferred tax in their Financial Statements 3.9.3 Withholding Tax on Dividends except for the following;
for temporary differences, where reversals Dividend distributed out of taxable profit
• Sales tax incurred on a purchase of a
of such differences extend beyond the tax of the local companies attracts a 10%
assets or services is not recoverable
exemption period. deduction at source and is not available
from the taxation authority, in which
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LOLC HOLDINGS PLC
case the sales tax is recognised as and other related parties as defined in 3.13 Employee Benefits
part of the cost of acquisition of the Finance Companies Act Direction No
3.13.1 Defined Contribution Plans
asset or as part of the expense item 03 of 2008 on Corporate Governance
A Defined Contribution Plan is a post-
as applicable; and of Registered Finance Companies.
employment benefit plan under which
• Receivables and payables that are • Deposit liabilities held as collateral an entity pays fixed contributions into
stated with the amount of sales tax against any accommodation granted a separate entity and will have no legal
included. or constructive obligation to pay further
• Deposit liabilities falling within the
amounts. Obligations for contributions to
The net amount of sales tax recoverable meaning of dormant deposits in terms
Defined Contribution Plans are recognised
from, or payable to, the taxation authority of the Finance Companies Act, funds
as an employee benefit expense in the
is included as part of other receivables or of which have been transferred to
Statement of statement of profit or loss
other payables in the statement of financial Central Bank of Sri Lanka
in the periods during which services are
position.
Registered Finance Companies are rendered by employees.
required to pay a premium of 0.15% on
3.10 Borrowing Costs
eligible deposit liabilities as at each month 3.13.1.1 Employees’ Provident Fund
Borrowing costs that are directly to be payable within a period of 15 days (EPF), Ceylon Plantation
attributable to the acquisition, construction after the respective month end. Provident Society (CPPS) and
or production of qualifying assets that take
Estate Staff Provident Society
a substantial period of time to get ready 3.12 Grants and Subsidies (ESPS)
for its intended use or sale, are capitalised
3.12.1 Grants related to assets The Group and employees contribute 12%
as part of the assets.
Grants related to property, plant and and 8% respectively on the salary of each
Borrowing costs that are not directly equipment are initially deferred and employee to the above mentioned funds.
attributable to the acquisition, construction allocated to Statement of statement of
or production of a qualifying asset are profit or loss on a systematic basis over 3.13.1.1.1 Employees’ Trust Fund (ETF)
recognised in Profit or Loss using the the useful life of the related property, The Group contributes 3% of the salary of
effective interest method. plant and equipment. Grants related to each employee to the Employees’ Trust
assets, including non-monetary grants at Fund.
3.11 Deposit Insurance Scheme fair value, are deferred in the statement
In terms of the Finance Companies of financial position and credited to the 3.13.2 Defined Benefits Plans
Direction No 2 of 2010 “Insurance Statement of statement of profit or loss A defined benefit plan is a post-
of Deposit Liabilities” issued on 27th over the useful life of the related asset as employment benefit plan other than a
September 2010, all Registered Finance given below; defined contribution plan. The Company’s
Companies are required to insure their net obligation in respect of defined benefit
deposit liabilities in the Deposit Insurance No. of Rate pension plans is calculated by estimating
Scheme operated by the Monetary Board Years % the amount of future benefit that
in terms of Sri Lanka Deposit Insurance Building 40 2. 5 employees have earned in return for their
Plant and Machinery 13 1/3 7. 5 service in the current and prior periods;
Scheme Regulations No 1 of 2010
that benefit is discounted to determine
issued under Sections 32A to 32E of the Equipment 8 12. 5
its present value. Any unrecognised past
Monetary Law Act with effect from 1st Roads 50 2 service costs are deducted.
October 2010.
Vehicles 20
The calculation is performed every three
Deposits to be insured include time and
Relevant assets are presented separately years by a qualified actuary using the
savings deposit liabilities and exclude the
in the Financial Statements without setting projected unit credit method. For the
following;
off against the respective grants. purpose of determining the charge for any
• Deposit liabilities to member period before the next regular actuarial
institutions 3.12.2 Grants related to assets valuation falls due, an approximate
Grants related to income are recognised estimate provided by the qualified actuary
• Deposit liabilities to the Government
in the Statement of statement of profit is used.
of Sri Lanka
or loss in the period in which they are
• Deposit liabilities to shareholders, receivable. When the benefits of a plan are improved,
directors, key management personnel the portion of the increased benefit
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LOLC HOLDINGS PLC
related to past service by employees is STATEMENT OF PROFIT OR LOSS 3.16.1 Revenue Recognition
recognised in Profit or Loss on a straight- Revenue is recognised to the extent that
3.16 Gross Income
line basis over the average period until the it is probable that the economic benefits
Gross income comprises of revenue,
benefits become vested. To the extent that will flow to the Group, and the revenue
income and other income other than
the benefits vest immediately, the expense and associated costs incurred or to
those relating to contributions from equity
is recognised immediately in Profit or Loss. be incurred can be reliably measured.
participants.
Revenue is measured at the fair value of
The Group recognises all actuarial gains
The following are the main components of the consideration received or receivable,
and losses arising from the defined benefit
the revenue; net of trade discounts and value added
plan in other comprehensive income (OCI)
taxes, net of sales within the Group.
and all other expenses related to defined
Finance & Earned income on
benefit plans are recognising as personnel
Leasing leases, hire purchases, 3.16.2 Goods Sold
expenses in Statement of statement
factoring, margin Revenue from the sale of goods in the
of profit or loss. The retirement benefit
trading, loans and course of ordinary activities is measured
obligation is not externally funded.
advances at the fair value of the consideration
Insurance Gross written premium received or receivable, net of returns,
3.13.3 Short-term Employee Benefits
trade discounts and volume rebates.
Short-term employee benefit obligations Manufacturing, Production, sale of
Revenue is recognised when persuasive
are measured on an undiscounted basis industrial consumer, agricultural,
evidence exists, usually in the form of
and are expensed as the related service Trading & motor vehicles and
an executed sales agreement, that the
is provided. A liability is recognised for Related industrial items and
significant risks and rewards of ownership
the amount expected to be paid under Services providing related
have been transferred to the customer,
short-term cash bonus if the company has services
recovery of the consideration is probable,
a present legal or constructive obligation Leisure and Accommodation sales, the associated costs and possible return
to pay this amount as a result of past entertainment service charges, food of goods can be estimated reliably, there
service provided by the employee, and the & beverages income is no continuing management involvement
obligation can be estimated reliably. outlet sales with the goods, and the amount of
Plantation Sale of perennial crops revenue can be measured reliably.
3.14 Accounts Payables and Accrued (Tea, Rubber, Coconut,
Expenses Timber etc.,) If it is probable that discounts will be
Trade and other payables are stated at IT Services IT service fee granted and the amount can be measured
amortised cost. reliably, then the discount is recognised
Stock Brokerage fees
as a reduction of revenue as the sales are
Brokering
3.15 Provisions, Contingent Assets recognised. The timing of the transfer of
and Contingent Liabilities Power Sale of electrical risks and rewards varies depending on the
Provisions are made for all obligations Generation energy individual terms of the sales agreement.
(legal or constructive) existing as at the Construction Contract fee
reporting date when it is probable that Real Estate Rental Income 3.16.3 Rendering of Services
such an obligation will result in an outflow Revenue from services rendered is
of resources and a reliable estimate can Revenue is income that arises in the recognised in Profit or Loss in proportion
be made of the quantum of the outflow. course of ordinary activities of group to the stage of completion of the
The amount recognised is the best companies. Other Income such as interest transaction at the reporting date. The
estimate of the consideration required on treasury bills, bonds and debentures, stage of completion is assessed by
to settle the present obligation at the gain on disposal of property, plant and reference to surveys of work performed.
reporting date, taking into account the equipment, rental income, dividend
risks and uncertainties surrounding the income, royalty income, foreign exchange 3.16.4 Interest Income on Leases,
obligation at that date. gain, franchise fees, gain on disposal of Hire Purchases, Loans and
investments securities, gain on marked Advances
All contingent liabilities are disclosed to market valuation of investments etc. is Interest income and expense are
as a note to the Financial Statements also included in gross income. recognised in Profit or Loss using the
unless the outflow of resources is remote.
effective interest method. The effective
Contingent assets are disclosed, where
interest rate is the rate that exactly
inflow of economic benefit is probable.
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LOLC HOLDINGS PLC
discounts the estimated future cash Other fees and commission income, Income is accounted for on accrual basis
payments and receipts through the including account servicing fees, and deemed earned on disbursement of
expected life of the financial asset or investment management fees, sales advances for invoices factored.
liability (or, where appropriate, a shorter commission, placement fees and
period) to the carrying amount of the syndication fees, are recognised as the 3.16.9 Revenue from Accommodation
financial asset or liability. When calculating related services are performed. Sales and Services Charge
the effective interest rate, the Group Revenue from accommodation sales is
estimates future cash flows considering Other fees and commission expenses
recognised for the rooms occupied on a
all contractual terms of the financial relate mainly to transaction and service
daily basis, together with outlet sales and
instrument, but not future credit losses. fees, which are expensed as the services
other income from hotel operations.
are received.
The calculation of the effective interest rate 90% of Service Charge collected
includes all fees paid are an integral part 3.16.6 Net Trading Income from guests is distributed among the
of the effective interest rate. Transaction Net trading income comprise of gains employees, retaining 10% of such
costs include incremental costs that are less losses related to trading assets service charges collected for recovery of
directly attributable to the acquisition or and liabilities, and includes all realised breakages of cutlery, crockery, glassware
issue of a financial asset or liability. and unrealised fair value changes, and stainless steel items. Any balance
interest, dividends and foreign exchange amount of the retention after recovery of
Interest income and expenses presented
differences. actual breakages is redistributed among
in the Statement of statement of profit or
employees after the end of each financial
loss include: 3.16.7 Net income from Other Financial year.
Instruments at Fair Value
• interest on financial assets and
Through Profit or Loss 3.16.10 IT Service Fee
financial liabilities measured at
amortised cost calculated on an Net income from other financial IT services fee is accounted for on accrual
effective interest basis instruments at fair value through Profit or basis.
Loss relates to non-trading derivatives
• interest on available for sale held for risk management purposes that 3.16.11 Turnover from Sale of Solar
investment securities calculated on an do not form part of qualifying hedge Systems and Sale of Electricity
effective interest basis relationships and financial assets and The above revenue components are
liabilities designated at fair value through accounted on accrual basis.
Interest income and expenses on all Profit or Loss, and include all realised
trading assets and liabilities are considered and unrealised fair value changes, 3.15.12 Other Income
to be incidental to the Group’s trading interest, dividends and foreign exchange Rent income, non-operational interest
operations and are presented together differences. income, royalty income and franchise fees
with all other changes in the fair value of
are accounted for on accrual basis.
trading assets and liabilities in net trading 3.16.8 Factoring Income
income. Dividend income is recognised when the
Revenue is derived from two sources,
Funding and providing Sales Ledger right to receive payment is established.
Fair value changes on other derivatives
held for risk management purposes, Related Services.
Gain on disposal of property, plant and
and other financial assets and liabilities equipment and other non-current assets,
Funding - Discount income relating to
carried at fair value through Profit or including investments held by the Group
factoring transactions are recognised at
Loss, are presented in net income from have been accounted for in the Statement
the end of a given accounting month.
other financial instruments at fair value of statement of profit or loss, carrying
In computing this discount, a fixed rate
through Profit or Loss in the Statement of amount of such assets after deducting
agreed upon at the commencement of the
statement of profit or loss. from the net sales proceeds on disposal.
factoring agreement is applied on the daily
balance in the client’s current account.
3.16.5 Fees and Other Income 3.16.13 Rental Income
Fees and commission income and Sales Ledger Related Services - A service Rental income from investment property is
expense that are integral to the effective charge is levied as stipulated in the recognised in Profit or Loss on a straight-
interest rate on a financial asset or liability factoring agreement. line basis over the term of the lease. Lease
are included in the measurement of the incentives granted are recognised as an
effective interest rate. integral part of the total rental income,
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LOLC HOLDINGS PLC
over the term of the lease. Rental income 3.18 Finance Income and Finance of less than three months which are
from subleased property is recognised as Costs subject to insignificant risk of changes in
other income. Finance income comprises interest income their fair value.
on funds invested, dividend income, gains
3.16.14 Amortisation of Government on the disposal of financial assets, fair 3.21 Related Party Disclosures
Grants Received value gains on financial assets. Interest 3.21.1 Transactions with Related
An unconditional government grant related income is recognised as it accrues in Parties
to a biological asset is recognised in the Profit or Loss, using the effective interest The Company carries out transactions in
Statement of statement of profit or loss method. Dividend income is recognised in the ordinary course of its business with
as other income when the grant becomes Profit or Loss on the date that the Group’s parties who are defined as related parties
receivable. right to receive payment is established, in Sri Lanka Accounting Standard 24.
which in the case of quoted securities is
Other government grants are recognised
normally the ex-dividend date. 3.21.2 Transactions with Key
initially as deferred income at fair value
when there is reasonable assurance that Management Personnel
Finance costs comprise of interest
they will be received and the Group will expense on borrowings and impairment According to Sri Lanka Accounting
comply with the conditions associated losses recognised on financial assets Standard 24 “Related Party Disclosures”,
with the grant and are then recognised (other than trade receivables), are Key management personnel, are those
in the Statement of statement of profit recognised in the statement of profit or having authority and responsibility for
or loss as other income on a systematic loss. planning, directing and controlling the
basis over the useful life of the asset. activities of the entity. Accordingly, the
3.19 Earnings per Share Board of Directors (including executive
Grants that compensate the Group for
and non-executive Directors), personnel
expenses incurred are recognised in the The Group presents basic and diluted
that hold designation of Deputy General
Statement of statement of profit or loss as earnings per share data for its ordinary
Manager and above positions and their
other income on a systematic basis in the shares. Basic earnings per share is
immediate family member have been
same periods in which the expenses are calculated by dividing the Profit or Loss
classified as Key Management Personnel
recognised. attributable to ordinary shareholders of the
of the Company.
Parent Company by the weighted average
3.17 Expenses Recognition number of ordinary shares outstanding The immediate family member is defined
Expenses are recognised in the Statement during the year. Diluted earnings per share as spouse or dependent. Dependent is
of statement of profit or loss on the basis is determined by adjusting the Profit or defined as anyone who depends on the
of a direct association between the cost Loss attributable to ordinary shareholders respective Key Management Personnel for
incurred and the earning of specific items and the weighted average number of more than 50% of his/her financial needs.
of income. All expenditure incurred in the ordinary shares outstanding, for the effects
running of the business and in maintaining of all dilutive potential ordinary shares. 3.22 SLFRS 12 - Disclosure of
property, plant & equipment in a state of Interests in Other Entities
efficiency has been charged to income in 3.20 Statement of Cash Flows
SLFRS 12 Disclosure of Interests in Other
arriving at the profit for the year. The Cash Flow Statement has been Entities is a consolidated disclosure
prepared using the ‘Indirect Method’ of standard requiring disclosures about
For the presentation of the statement
preparing Cash Flows in accordance an entity’s interests in subsidiaries,
of profit or loss the Directors are of the
with the Sri Lanka Accounting Standard joint arrangements, associates and
opinion that the nature of the expenses
7 ‘Cash Flow Statements.’ Cash and unconsolidated ‘structured entities’.
method presents fairly the element of the
cash equivalents comprise short term,
Company’s performance, and hence such
highly liquid investments that are readily The objective of SLFRS 12 is to require
presentation method is adopted.
convertible to known amounts of cash the disclosure of information that enables
Preliminary and pre-operational and are subject to an insignificant risk of users of Financial Statements to evaluate
expenditure is recognised in the statement changes in value. the nature of, and risks associated with,
of profit or loss. its interests in other entities, the effects
Cash and cash equivalents comprise of of those interests on its financial position,
Repairs and renewals are charged to the cash in hand and cash at banks and other financial performance and cash flows.
Statement of Comprehensive Income highly liquid financial assets which are held
in the year in which the expenditure is for the purpose of meeting short-term
incurred. cash commitments with original maturities
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3.23 Operating Segments the statement of financial position but are rights and obligations are extinguished or
An operating segment is a component disclosed unless they are remote. expire. Investment contracts can however
of the Group that engages in business be reclassified as insurance contracts
activities from which it may earn revenues 3.26 Capital Management after inception if insurance risk becomes
and incur expenses, including revenues The Board of Directors monitors the return significant.
and expenses that relate to transactions on capital investment on a month basis.
with any of the Group’s other components. This review is mainly carried out through 3.27.2 Reinsurance Receivable/Payable
All operating segments operating results return on investment analysis prepared The Group cedes insurance risk in
are reviewed regularly by Group Board on a quarterly basis. The plan forecasts the normal course of business for all
of Directors to make decisions about are also reviewed on a monthly basis to of its businesses. Reinsurance assets
resources to be allocated to the segment ensure that targets are met in order to represent balances due from reinsurance
and to assess its performance, and for manage the capital invested in Group companies. Amounts recoverable from
which discrete financial information is Companies. reinsurers are estimated in a manner
available. consistent with the outstanding claims
The Board of Directors also decides and provision or settled claims associated
Accordingly, the segment comprises of monitors the level of dividends to ordinary with the reinsurer’s policies and are in
financial services, insurance, IT services, shareholders. accordance with the related reinsurance
Trading, Leisure, Plantation, Power and contract.
Energy and Others are described in Note The Company does not subject to any
57. externally impose capital requirements. Reinsurance assets are reviewed for
However, companies within the group impairment at each reporting date or
Segment results, assets and liabilities have such requirement based on the more frequently when an indication of
include items directly attributable to a industry in which such company is impairment arises during the reporting
segment as well as those that can be established. Group companies which year. Impairment occurs when there is
allocated on a reasonable basis. Segment require externally imposed capital will objective evidence as a result of an event
capital expenditure is the total cost monitor such requirement on a regular that occurred after initial recognition of
incurred during the period to acquire basis and report to respective legal the reinsurance asset that the Group may
segment assets that are expected to be authority in order to ensure compliance not receive all outstanding amounts due
used for more than one period. with such regulatory requirement. under the terms of the contract and the
event has a reliably measurable impact on
Expenses that cannot be directly identified ACCOUNTING POLICIES APPLIES TO the amounts that the Group will receive
to a particular segment are allocated on SPECIFIC INDUSTRY SECTORS from the reinsurer. The impairment loss is
bases decided by the management and
3.27 Insurance Sector recorded in the comprehensive statement
applied consistently throughout the year.
of profit or loss.
3.27.1 Product Classification
3.24 Subsequent Events Insurance contracts are those contracts Ceded reinsurance arrangements do
All material subsequent events have when the Group (the insurer) has accepted not relieve the Group from its obligations
been considered and where appropriate significant insurance risk from another to policyholders. Reinsurance liabilities
adjustments or disclosures have been party (the policyholders) by agreeing represent balances due to reinsurance
made in the respective Notes to the to compensate the policyholders if a companies. Amounts payable are
Financial Statements. specified uncertain future event (the estimated in a manner consistent with the
insured event) adversely affects the related reinsurance contract. Premiums
3.25 Commitments and policyholders. As a general guideline, and claims are presented on a gross basis
Contingencies the Group determines whether it has for both ceded and assumed reinsurance.
All discernible risks are accounted for significant insurance risk, by comparing
in determining the amount of all known benefits paid with benefits payable if the Reinsurance assets or liabilities are
liabilities. Contingent Liabilities are insured event did not occur. derecognised when the contractual rights
possible obligations whose existence will are extinguished or expire.
Once a contract has been classified
be confirmed only by uncertain future
as an insurance contract, it remains an Liability Adequacy Test
events or present obligations where
insurance contract for the remainder of its At each reporting date, an assessment
the transfer of economic benefit is not
lifetime, even if the insurance risk reduces is made of whether the recognised long-
probable or cannot be reliably measured.
significantly during this period, unless all term business provisions are adequate,
Contingent Liabilities are not recognised in
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LOLC HOLDINGS PLC
using current estimates of future cash 3.26.4.3 Unearned Premium Reserve 3.27.4.7 Claims
flows. If that assessment shows that the Unearned premium is the portion of gross Claims incurred include provisions for
carrying amount of the liabilities (less written premium and reinsurance premium the estimated cost of claims and related
related assets) is insufficient in light of the written in the current year in respect of risk handling expenses in respect of incidents
estimated future cash flows, the deficiency related to subsequent periods. Unearned up to 31st December. Claims outstanding
is recognised in the statement of profit or premium is calculated on the 1/365 basis are assessed by reviewing the individual
loss by setting up an additional provision in accordance with the Rules made by the claim files and estimating changes in
in the Statement of Financial Position. Insurance Board of Sri Lanka under the the ultimate cost of settling claims. The
Regulation of Insurance Industry Act, No. provision in respect of claims Incurred But
3.27.3 Insurance Premium Receivables 43 of 2000. Not Reported (IBNR) is actuarially valued
Collectability of premiums and other to ensure a more realistic estimation of the
debts are reviewed on an on-going basis. 3.27.4.4 Unexpired Risks future liability based on past experience
Policies issued on credit basis and that are Provision is made where appropriate and trends. Actuarial valuations are
known to be uncollectible are cancelled for the estimated amount required over performed on an annual basis. Whilst the
and the respective gross written premium and above unearned premium to meet Directors consider that the provision for
is reversed. A provision for doubtful future claims and related expenses on the claims related reinsurance recoveries are
debts is raised when some doubt as to business in force as at 31st December. fairly stated on the basis of information
collection exists. currently available, the ultimate liability
3.27.4.5 Unexpired Risk Reserve will vary as a result of subsequent
Insurance receivables are recognised information and events. This may result
The calculation of premium liability requires
when due and measured on initial in adjustments to the amounts provided.
a comparison between the company’s
recognition at the fair value of the Such adjustments are reflected in the
held unearned premium reserve less
consideration received or receivable. Financial Statements for that period. The
DAC provision with actuarial estimate of
Subsequent to initial recognition, methods used, and the estimates made,
the unexpired risk for the total general
insurance receivables are measured are reviewed regularly
insurance business. The resulting
at amortised cost. The carrying value
premium liability is the higher of these
of insurance receivables is reviewed 3.27.4.8 Valuation of Insurance
two. In estimating the unexpired risk
for impairment whenever events or Provision-General Insurance
liability, assumptions are made on the
circumstances indicate that the carrying Reserve for Outstanding
expected ultimate loss ratio for each class
amount may not be recoverable, with Claims Including IBNR
of business and management expenses
the impairment loss recorded in the
incurred whilst these policies remain Methodology for Claim Liability
comprehensive statement of profit or loss.
exposed for claims.
Central Estimate
Insurance receivables are derecognised
3.27.4.6 Deferred Acquisition Costs The Central Estimate of the Net Claim
when the de-recognition criteria for
(DAC) Liability has been determined based
financial assets have been met.
upon the gross analysis performed for
Those direct and indirect costs incurred
the Company as at 31st December
3.27.4 General Insurance Business during the financial period arising from the
2013, whereby a full review of the Loss
writing or renewing of insurance contracts
3.27.4.1 Gross Written Premium Development Factors on a gross basis is
are deferred and amortised over the
Premium is accounted as and when performed. Various Gross-to-Net ratios
period in which the related revenues are
cash is received and in the same period are compared, and the Net Claim Liability
earned. All other acquisition costs are
as the policy liabilities are created. For is determined by applying a factor to the
recognised as an expense when incurred.
single premium contracts, premiums are Gross Claim Liability.
recorded as income when received with Deferred acquisition expenses represent
any excess profit deferred and recognised Since the net analysis is based on the
commission and franchise fees which
as income in a constant relationship to the gross analysis, any change in the gross
vary with and are directly related to the
insurance in force, for annuities and the results will subsequently affect the results
production of business. Commission
amount of expected benefit payments. in this net valuation.
expenses are deferred and charged over
the period in which the related premiums The Central Estimate is then adjusted by
3.27.4.2 Reinsurance Premium are earned, on 1/365 basis. the same provision as the gross analysis
Reinsurance premium expense is accrued to allow for Claims Handling Expenses
on active policies on a monthly basis. (CHE) such as fees for loss adjustment,
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LOLC HOLDINGS PLC
and the annual salary and related 75% Confidence Level Estimate Company on the recommendation of the
overhead costs of the claims department. The Central Estimates of the URRs Actuary, following his annual investigation
are then projected to secure an overall of the Life insurance business. The
75% Confidence Level Estimate level of sufficiency of not less than 75% actuarial valuation takes into account all
The volatility of the Central Estimate of confidence. In determining the URR liabilities including contingent liabilities and
claims reserves are then projected to at the 75% confidence level, actuaries is based on assumptions recommended
secure an overall level of sufficiency of not multiply the Central Estimate of the URR by the reporting actuary.
less than 75% confidence. In determining with an adjustment factor for each line
the Net Claim Liability on 75% confidence of business. The adjustment factor is 3.27.5.5 Life Insurance Contract
level, we have adopted the Prudential determined at a class level as well as at Liabilities
Reserve for Adverse Development (PRAD) an aggregate level, and takes into account Life insurance liabilities are recognised
and Fund Prudential Reserve for Adverse the observed relationship between when the contracts are entered into and
Development (FPRAD) risk margins that the current estimate of an Accident premiums are charged. These liabilities are
were derived in the gross analysis as at Period’s ULR and the trended ULR. The calculated via the net premium method
31st December 2013, which were based diversification is determined by comparing for protection products, the unit fund plus
on a Stochastic Chain Ladder approach. the sum of adjustment factors by line of sterling reserve method for Unit-linked
business and the adjustment factor at the products and a modified gross premium
Calculation of Discounted Claim aggregate level. method for conventional products. For
Liability the net premium method, the liability is
The Discounted Claim Liability is 3.27.5 LIFE INSURANCE BUSINESS calculated as the discounted value of the
calculated as the current value of the 3.27.5.1 Gross Written Premium future benefits that are directly related to
projected future claim payments for each the contract, less the discounted value
Premium is accounted as and when
class of business. of the theoretical premiums that would
cash is received and in the same period
be required to meet those future benefits
The Claim Liability is discounted on as the policy liabilities are created. For
based on the valuation assumptions. For
the same basis as the gross numbers. single premium contracts, premiums are
the sterling reserve method all contract-
These are based upon the Government recorded as income when received with
related cash flows are projected using best
Securities spot rates from the Central any excess profit deferred and recognised
estimate assumptions (but with valuation
Bank of Sri Lanka and the modelled as income in a constant relationship to the
claim rates) and additional liabilities are
payment patterns. insurance in force, for annuities and the
set up in the event that contracts are not
amount of expected benefit payments.
self-financing. For the modified gross
Methodology for Estimate of Premium premium method, the investment account
Liability 3.27.5.2 Reinsurance Premium
is the starting point and in addition to
Reinsurance premium expense is accrued
Central Estimate that a liability may be held on account of
on active policies on a monthly basis.
For the Central Estimate of the Premium future cash flows shortfalls. This second
Reinsurance recoveries are credited to
Liability, actuary developed a trended component is calculated exactly as per
match the relevant gross claims.
Ultimate Loss Ratio for each class the sterling reserve above.
to compute the Central Estimate of 3.27.5.3 Benefits, Losses and Expenses
the Unexpired Risk Reserve (URR). A 3.27.5.6 Valuation of Insurance
Expenses relate to the acquisition and Provision -Life Insurance
provision, which is the same value as
maintenance of Long Term insurance Contract Liabilities
per the gross analysis, was added to the
business. Claims by death or maturity are
Central Estimate of the URR to account Methodology
charged against revenue on notification
for CHE and a further provision, based Actuaries have adopted the net premium
of death or on expiry of the term. Claims
on the Unearned Premium Reserve valuation methodology for calculating the
payable includes direct cost of settlement.
(UPR), has been retained to cover future provisions for majority of the products and
Interim payments and surrenders are
Management Expenses. The adjusted loss riders (all except those mentioned below),
accounted for at the time of settlement.
ratios are finally applied to the UPR that as required by the extant regulations,
the company currently holds to derive the by valuing individual policy records.
3.27.5.4 Actuarial Valuation for Long
Central Estimate of the URR. For regular premiums products, an
Term Insurance Provision
The Directors determine the Long term allowance for recovery of initial expenses
insurance business provisions for the through loadings in the renewal premium
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LOLC HOLDINGS PLC
has been allowed for in the provisions Assumptions Business class (Premium Investment
by using minimum of the Zillmer and The following reserving assumptions have payment option) return
Sprague adjustments as prescribed been used for the purpose of the annual
Participating (Regular 5.0%
in the regulations. Besides limiting the statutory valuation as at December 2019;
premium)
calculated net premium to be maximum
of 90% of the policy premium to ensure a • Mortality rates Non-participating (Regular 6.5%
minimum 10% allowance to cover future premium)
110% of A67/70 (Ultimate) table has been
expenses and commissions at the policy used as the reserving assumptions. Non-participating (Single 8.0%
level. Actuaries have checked that this premium)
implicit allowance made for expenses and • Rates for benefits other than
commissions through a reduction in the mortality • Expenses inflation
future premium income in the net premium 110% of the applicable reinsurance Real annual investment returns have
methodology is sufficient to cover the premium rates provided by reinsurer, been assumed to be 1.0%, based on
projected expenses and commissions for made available to actuaries at the time which expense inflation has been set to
regular premium products at the product of pricing the various riders attaching to be 1.0% lower than the assumed annual
level. For single premium products, an the dividend based fund accumulation investment returns tabulated above.
explicit additional provision has been products.
calculated to cover future maintenance • Expense assumptions
expenses at the policy level. • Lapses The reserving expense assumptions have
No lapses have been assumed for been set out in the table below. For group
Statutory provisions have been set equal
prudence, except for dividend based products these represent the expense
to the unearned premium reserves (UPR)
fund accumulation products, where assumption applicable to each policy and
for the base products Corporate Life &
lapses equal to 50% of the best estimate not the scheme.
Migrant Workers, and the ADB, TPD due
to accident and PPD riders. pricing assumption have been used for
the calculation of the expense provision. Type of expense Expense
For the dividend based fund accumulation The lapse rates assumed for pricing the assumption
products, Life Protect, Life Protect Plus, dividend based products are tabulated Fixed per annum LKR 220
Pension Plan and Child Plan, provisions below; % of provisions 0.275%
have been set equal to the fund value Policy year % of renewal 2.750%
plus an expense provision, where the
premium*
expenses provision has been set equal 2 30%
to any excess of expected future outgo Regular Commission rates
2 15% commission* as per the pricing
over future income on the prudent basis
calculated at the policy level. 3 10% certificates of
respective products
The calculated provisions were floored 4 5%
*Applicable
at zero at the individual policy level, i.e. 5 5% only for regular
negative provisions have not been allowed premium
for any policy. 6-10 5%
products
11+ 2.5%
The calculated provisions for each
• Loan repayment rate
individual policy is note less than the
• Investment return Mortgage reduction plan (MRP) and
applicable surrender value as on valuation
The assumed investment returns are Divisaviya are reducing terms assurance
date, as no surrender value is currently
as prescribed by the regulations for plans to cover the outstanding loan liability
applicable for any of the in-force policies.
life insurers with less than three years of the policyholder. However, the policy
Majority of the products are protection
of operations. The following table data for these products does not contain
based which do not offer any surrender
summarises the annual investment returns the loan repayment rate applicable for
value. Surrender value on the savings
assumed for different classes of business individual policies. Actuaries have used
products is payable only after the third
and premium payment options; an average loan repayment rate of 28%
policy year with none of the in-force
of 12% per annum for the MRP and
policies having exceeded that duration.
Divisaviya product respectively. These
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LOLC HOLDINGS PLC
have been estimated based on the original associated with the assets will flow to interest attributable to long-term loans
sum assured, sum assured as at valuation the entity and the fair value or cost of the used for financing immature plantations.
date and issue date information present in assets can be measured reliably. Attributable overheads incurred on the
the policy data. plantation are apportioned based on
Nursery cost includes the cost of direct the labour days spent on respective re-
3.28 PLANTATION SECTOR materials, direct labour and an appropriate planting and new planting and capitalised
proportion of directly attributable on the immature areas. The remaining
3.28.1 Agricultural Activities
overheads, less provision for overgrown non-attributable overhead is expensed
The Group considers all the activities that plants. in the accounting period in which it is
are managed in biological transformation
incurred.
and harvest of biological assets for sale or 3.28.3 Bearer Biological Assets
for conversion into agricultural produce or Expenditure incurred on repairs or
The bearer biological assets are measured
into additional biological asset. maintenance of property, plant and
at cost less accumulated depreciation and
accumulated impairment losses, if any, equipment in order to restore or maintain
3.28.2 Biological Assets the future economic benefits expected
in terms of LKAS 16 – “Property, Plant &
Biological assets are classified as mature Equipment”. from originally assessed standard of
biological assets and immature biological performance is recognised as an expense
assets. Mature biological assets are The cost of land preparation, rehabilitation, when incurred.
those that have attained harvestable new planting, replanting, crop
specifications or are able to sustain diversification, inter-planting and fertilising, The expenditure incurred on perennial
regular harvests. Immature biological etc., incurred between the time of crop (Tea/Rubber/Coconut) fields, which
assets are those that have not yet attained planting and harvesting (when the planted come into bearing during the year, has
harvestable specifications. Tea, Rubber, area attains maturity), are classified as been transferred to mature plantations and
Coconut, Timber, Other plantations and immature plantations. These immature depreciated over their useful life period.
nurseries are classified as biological plantations are shown at direct costs plus These mature plantations are depreciated
assets. attributable overheads. The expenditure over their useful lives or unexpired lease
incurred on bearer biological assets period, whichever is less. No depreciation
The biological assets are further (Tea, Rubber) which comes into bearing is provided for immature plantations.
classified as bearer biological assets during the year, is transferred to mature
and consumables biological assets. plantations. 3.28.5 Infilling Costs
Bearer biological assets includes tea, The land development costs incurred in
rubber and coconut trees, those that are The Group recognises tea, rubber, the form of infilling have been capitalised
not intended to be sold or harvested, coconut and mixed crop, at cost in to the relevant mature field where infilling
however, used to grow for harvesting accordance with the new ruling provide results in an increase in the economic life
agricultural produce from such biological the option to measure bearer biological of the relevant field beyond its previously
assets. Consumable biological assets assets using LKAS16 – Property, Plant assessed standard of performance, in
include managed timber own by the and Equipment. accordance with Sri Lanka Accounting
company (Eucalyptus Torariyana, Albezzia, Standard - 16 and depreciated over the
Graveelia, Eucalyptus Grandis, Astonia, 3.28.4 Limited Life Land Development useful life at rates applicable to mature
Pinus, Toona, Mahogany, Teak, Jak, Cost on Bearer Biological plantation. These rates are re-evaluated
Rubber, Nadun, Mango, Pellen, Hora, Assets at Cost (New/Re- annually.
Domba, Lunumidella, Wal Del and Mara Planting)
on the plantations have been taken into The total cost of land preparation, Infilling cost that are not capitalised have
consideration in this valuation of timber rehabilitation, new planting, re-planting, been charged to the statement of profit or
trees) those that are to be harvested as crop diversification, inter-planting and loss in the year in which they are incurred.
agricultural produce or sold as biological fertilising, incurred between the time of
assets. planting and harvesting (When the planted 3.28.6 Growing Crop Nurseries
area attains maturity) are recognised Nursery cost includes the cost of direct
The entity recognises the biological assets
as initial cost for capitalisation. These materials, direct labour and an appropriate
when, and only when, the entity controls
immature plantations are shown at direct proportion of directly attributable
the assets as a result of past event, it is
costs plus attributed overheads, including overheads.
probable that future economic benefits
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LOLC HOLDINGS PLC
3.28.7 Useful Life of Bearer Biological • Growing Crop Nurseries The impairment loss, if any, is recognised
Assets Nursery cost includes the cost of direct in the statement of profit or loss.
The estimated useful lives for the current materials, direct labour and an appropriate
Amortisation rates used for the purpose
and comparative years are as follows; proportion of directly attributable
are as follows:
overheads.
Tea 30-33 1/3
No. of Rate
years 3.28.9 Permanent Land Development
Years %
Rubber 20 years Costs
Permanent land development costs Bare Land 53 1.89
Coconut 50 years
are those costs incurred making major Improvement to Lands 30 3.33
Cardamom / Cinnamon 15 years
infrastructure development and building Mature Plantations 30 3.33
new access roads on leasehold lands.
3.28.8 Consumable Biological Assets Buildings 25 4.00
Trees namely teak, mahogany, Nadun, These costs have been capitalised and Machinery 15 6.67
mango, Albezzia, Wal del, and etc. are amortised over the remaining lease period. Crop Diversification 30 3.33
considered as consumable biological
Water and Sanitation 20 5.00
assets and measured in accordance Right-To-Use of Land on Lease
Other Vested Assets 30 3.33
with LKAS 41- Agriculture. The initial Lease agreements of all JEDB/SLSPC
costs incurred in planting such trees are estates handed over to the Group’s Sub Permanent Land 53 1.89
capitalised until the market determined Subsidiary Maturata Plantations Limited Development
prices or values are not available and for have been executed to date. All of these
which alternative estimates of fair value are leases are retroactive to 15th/22nd 3.28.11 Liability to make lease rentals
to be clearly unreliable. Once the fair value June 1992, the dates of formation of the The liability to make the rentals to the
of such a biological asset becomes reliably Group’s Sub Subsidiary. The leasehold lessor is recognised on amortised cost
measurable, the group measures it at its rights to the bare land on all of these using effective interest rate method. The
fair value less costs to sell. The change estates have been taken into the books of finance cost is recognised in the statement
in fair values will be directly identified in the Group’s Sub Subsidiary on 15th/22nd of profit or loss under finance cost using
statement of profit or loss. June 1992, immediately after formation effective interest rate method.
of the Group’s Sub Subsidiary, in terms
The Group has engaged an Independent 3.29 Impact due to the COVID-19
of the ruling obtained from the Urgent
Chartered Valuation Surveyor Mr. K.T.D. The outbreak of COVID-19 in the last
Issue Task Force (UITF) of the Institute of
Tissera in determining the fair value of quarter of the financial year has caused
Chartered Accountants of Sri Lanka. For
managed Timber Plantation. The valuer disruption to many local and global
this purpose, Board of the Group’s Sub
has valued the Timber Plantation per business and economic activities. The
Subsidiary decided at its meetings that
tree valuation basis by using available log Group has been closely monitoring the
lease bare land would be revalued at the
prices in city centers less point-of-sale- impact of the pandemic on the Group’s
value established for this land by Valuation
costs. The timber plants having less than business operations as at year end and
Specialist Dr. D. R. Wickramasinghe just
three years old have not been taken in to also in the immediate future. Commencing
prior to the formation of the Group’s Sub
the valuation and hence, the cost of such from February 2020 this global health
Subsidiaries. The values as at 22nd June
plants has been added to the valuation. hazard had an adverse impact on many
1992 and 15th June 1992 were taken in to
All other assumptions are given in Note of the Group’s operations. Some of the
the books of Maturata Plantations Limited.
No. 29.7. The Group measures the Timber companies in certain sectors operated
Plantation at fair value less estimated- on a reduced scale, while many of the
3.28.10 Amortisation
point-of-sale-costs as at each date of companies in the tourism sector have
The Right-to-use of land on lease is
Statement of Financial Position. The gain temporarily halted operations after the
amortised over the remaining lease term
or loss on changes in fair value of Timber year end. Some companies involved in
of such asset or over the useful life of
Plantation is recognised in the statement essential services such as the Financial,
the underlying asset if shorter. Leasehold
of profit or loss Insurance, Agri Inputs, Trading and
rights are tested for impairment annually
and are written down where applicable. Plantations segments operated as usual.
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LOLC HOLDINGS PLC
Most of the back-office operations of the

Group continued to function remotely and/
or in the work places as required.
The Group has considered the “Guidance

Notes on Accounting Considerations of
the COVID-19 Outbreak (updated on 11th
May 2020)” and “FREQUENTLY ASKED
QUESTIONS (FAQs) on Guidance Notes
on Accounting Considerations of the
COVID-19 Outbreak (updated on 11th
May 2020) “issued by CA Sri Lanka, when
preparing these financial statements.
Impact of COVID-19 on our Key Business

Sectors
The Management has assessed the

impact of COVID-19 on the key business
sectors of the Group. The impact of the
COVID 19 pandemic has been considered
as of reporting date and specific
considerations have been disclosed under
the relevant notes.
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LOLC HOLDINGS PLC
4. Gross income
Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Interest income 4.1 81,852,729 75,606,318 3,904,229 2,839,764

Revenue 4.2 24,944,735 24,805,609 2,480,478 1,557,044
Income 4.3 14,200,638 13,670,357 4,073,060 4,652,006
Other income/(expenses) 5 9,443,576 10,231,624 (1,213,970) 2,601,812
130,441,678 124,313,908 9,243,797 11,650,626
4. 1. Interest income
Leasing interest income 14,815,801 15,176,930 - -
Hire purchases interest income - 186 - -
Interest income on deposits 552,743 634,612 - -
Advances and other loans interest income 59,503,694 52,558,000 3,776,980 2,716,788
Operating lease and hire rental income 403,237 486,143 85,699 105,168
Overdue interest income 3,703,324 3,590,685 41,550 17,808
Debt factoring income 2,873,930 3,159,762 - -
81,852,729 75,606,318 3,904,229 2,839,764
Interest income on loans and advances includes interest accrued on impaired loans of Rs. 948.25 Mn in 2020. (Rs. 804.58 Mn for
2019).
4.2 Revenue
Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Sectorial revenue
Manufacturing 301,243 287,069 - -
Trading 17,894,451 15,957,693 1,491,716 537,981
Hotelier revenue 1,273,272 1,586,692 - -
Health Care 593,073 649,661 - -
Real Estate 197,112 221,914 - -
IT Services 501,209 669,772 - -
Other services 274,594 167,808 - -
Plantation 1,808,214 1,721,464 - -
Ethanol sales 41,883 - - -
Travel and tours 55,678 1,991,521 988,762 1,019,063
Construction contract revenue 1,573,385 1,112,684 - -
Supply of electricity 430,621 439,331 - -
24,944,735 24,805,609 2,480,478 1,557,044
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LOLC HOLDINGS PLC
4.3 Income
Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Securities trading income 84,029 22,220 - -

Earned premium on insurance contracts long term 2,610,178 2,261,314 - -
Earned premium on insurance contracts general 4,060,342 3,581,955 - -
Rentals & sales proceeds - contracts written off 1,166,278 1,110,852 18,172 22,174
Transfer fees and profit on termination 2,273,312 2,071,247 54 130
Arrangement / documentation fee & other 3,927,592 4,243,298 1 3
Shared service income - - 3,709,387 4,322,723
Other operational income 78,907 379,471 345,446 306,976
14,200,638 13,670,357 4,073,060 4,652,006
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LOLC HOLDINGS PLC
5 Other income/(expenses)
Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Rental income 114,702 113,860 53,400 1,588

Royalty income - - 488,981 962,562
Dividends income 25,430 29,053 11,436 61,051
Franchise fees 21,760 - 566 428
Insurance policy fees 152,488 136,642 - -
Treasury handling charges - - 3,207 1,050,406
Asset hire income - - 248,169 248,169
Guarantee fee income - - 40,344 36,565
Interest received from government securities & other 3,675,834 3,478,021 70,053 4,391
interest earning assets
Debenture interest income 233,346 115,261 12,009 3,048
Gain / (loss) on disposal of quoted and non-quoted (407,812) - (55,552) -
shares
Gain / (loss) on Disposal of Group Investments - - (2,476,000) -
Gain on disposal of property, plant and equipment 86,813 159,238 30,767 50,770
Change in fair value of investment properties 28 3,915,140 4,067,925 27,933 72,004
Gain/(loss) on change in fair value of consumable 29.1 (136,816) 439,076 - -
biological assets
Gain/ (Loss) on fair valuation of FVTPL Instruments 593,994 1,194,689 (22,306) (55,664)
Foreign exchange gain / (loss) (1,620,217) (5,060,661) (164,147) (416,944)
Change in fair value of derivatives - forward contracts 1,507,651 4,682,010 (38) -
Amortisation of deferred income 42 7,033 32,771 - -
Penalty and early settlement interests 514,291 - - -
Commission income 84,682 - 506 2,563
Sale of timber 990 948 - -
Sale of refuse tea 71,134 102,015 - -
Sundry income 603,133 740,777 516,702 580,875
Total 9,443,576 10,231,624 (1,213,970) 2,601,812
Foreign exchange income represents both revaluation gain/(loss) on the Group’s net open position and realised exchange gain/
(loss) on foreign currency transactions.
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LOLC HOLDINGS PLC
6 Interest expenses
Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Financial liabilities at amortised cost

Customer deposits 21,804,575 19,542,048 - -
Commercial papers and promissory notes 2,914,097 1,433,466 3,046,871 1,429,268
Overdraft and other short-term borrowings 7,257,330 7,768,560 5,534,700 4,751,709
Long term borrowings 17,913,322 14,977,098 1,009,097 1,003,893
Finance leases 160,295 72,834 15,392 11,829
Debenture interests 2,753,951 2,055,046 980,405 823,500
Finance Cost on RIU Assets 200,293 - 83,239 -
Charges on forward rate contracts 1,847,831 2,791,600 - (128)
54,851,694 48,640,652 10,669,704 8,020,071
7 Direct expenses excluding finance expenses

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Value Added Tax (VAT) on leases/general expenses other than 1,643,224 2,637,841 - 53,913
VAT on financial services
Nation Building Tax (NBT), debits tax and others 709,820 367,291 1,997 5,113
Insurance benefits, losses and expenses 2,558,830 2,712,704 - -
Increase in long term insurance fund 703,790 668,916 - -
Insurance expenses 1,891,437 1,756,213 - -
Other direct expenses 446,037 323,131 2,430 4
7,953,931 8,466,096 4,427 59,030
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LOLC HOLDINGS PLC
8 Personnel expenses
Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Salaries, wages and other benefits 13,117,405 10,008,071 757,700 947,381

Contribution to EPF/CCPS/ESPS 697,827 649,994 109,999 113,620
Contribution to ETF 145,067 137,407 27,490 28,646
Post-employment defined benefit plans cost 43.1 350,140 269,590 69,479 58,182
Amortisation of prepaid staff cost 25.4 59,877 45,177 - -
Staff bonus 894,163 1,780,821 70,467 289,572
Staff training and development 165,121 167,622 4,268 7,134
Other staff related expenses 1,365,792 1,304,387 219,997 222,459
16,795,392 14,363,069 1,259,400 1,666,994
9 Net impairment loss on financial assets

Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Net impairment loss / (reversal) on;

Cash in hand and favourable bank balances 17.1 23,374 - - -
Investment securities
Financial assets at amortised cost
Corporate bonds 19.2.1.1 (204) 204 - -
Investments in term deposits 19.2.3.1 - 85,730 - -
Financial assets at amortised cost/ Finance lease 20
Finance lease receivables 20.1.4 1,111,414 356,828 - -
Operating lease receivables 20.20.1 630 (4,358) 630 (4,358)
Financial assets at amortised cost/ Advances and 21
other loans
Advances and loans 21.1.1 5,106,230 3,428,187 2,942 412
Factoring receivables 21.2.1 889,964 2,690,009 - -
Pawning advances 21.3.1 62,019 27,873 - -
Premium receivables 22 4,396 10,163 - -
Trade and other current assets 25.1.1 415,580 102,380 3,932 -
Contingent liabilities and commitments 41.1 (1,397) 3,604 - -
Bad debts written off net of reversals 9,611,791 4,765,882 75,764 158
17,223,797 11,466,502 83,268 (3,788)
149
LOLC HOLDINGS PLC
10 Depreciation and amortisation

Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Amortisation of prepaid lease rentals 26 - 2,262 - -

Amortisation of intangible assets 34.5 220,043 199,456 142,418 138,347
Depreciation of property, plant and equipment 35 2,972,103 1,922,372 469,938 440,360
Amortisation of bearer biological assets 30.1 293,719 48,600 - -
Amortisation of right of use asset 638,061 - 120,023 -
4,123,926 2,172,690 732,379 578,707
11 Other operating expenses

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Administration cost 12,365,117 10,432,495 2,591,794 2,459,954

Operating and marketing cost 3,611,582 3,260,853 681,047 559,214
15,976,699 13,693,348 3,272,841 3,019,168
12 Results from operating activities

Expenses are recognised in the statement of profit or loss on the basis of a direct association between the cost incurred and the
earnings of specific items of income. All expenditure incurred in the running of the business and in maintaining the property, plant
and equipment in a state of efficiency has been charged to the statement of profit or loss.
For the purpose of presentation of the income statement, the “function of expenses” method has been adopted, on the basis that it
presents fairly the elements of the Company’s and Group’s financial performance.
Results from operating activities are stated after charging all expenses including following:
Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Remuneration to executive Directors 51.1.1 296,500 275,215 33,709 20,783

Auditors’ Remuneration 12.1 73,885 49,583 5,380 4,347
Legal expenses 168,150 52,156 26,376 7,066
Secretarial fees 54,795 18,669 44,653 9,014
Professional fees 905,451 613,427 238,941 72,878
Deposit insurance premium 672,443 412,183 47,327 41,926
Advertising related expenses 652,014 1,212,483 1,635 2,349
Donations 50,817 45,900 36,043 38,137
150
LOLC HOLDINGS PLC
12.1 Auditors’ remuneration

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Remuneration for
Audit related services 67,228 43,055 4,265 3,740
Non-audit related services 5,273 5,122 1,115 607
Non-audit related services 1,384 1,406 - -
73,885 49,583 5,380 4,347
13 Results of equity accounted investees

Group
For the year ended 31 March 2020 2019
Note Rs.'000 Rs.'000
13.1 Share of profits of equity accounted investees, net of tax

Associates 32.6 1,019,970 1,108,860
1,019,970 1,108,860
13.2 Share of other comprehensive income of equity accounted investees (net of tax)
Group

subsequent periods:
Associates 32.6 244,964 27,895
244,964 27,895

subsequent periods :
Associates 32.6 504,596 52,977
504,596 52,977
749,560 80,873
151
LOLC HOLDINGS PLC
14 Results on acquisition and divestment of group investments

Group
Sunbird Bioenergy (SL) Ltd 31.6.1.4 5,395,369 -

Browns Health Care Group 31.7.1.3 507,918 -
Seylan Bank PLC 32.5.1 75,758 -
5,979,044 -
15 Income tax expense

Group tax expense is based on the taxable profit of individual companies within the Group. At present the tax laws of Sri Lanka do
not provide for Group taxation.
15.1 Major components of income tax expense are as follows:

Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Current tax expense 15.3 3,264,286 3,466,686 119,456 49,767

Deferred tax expense 33.5 (700,527) 149,979 (622) 38,248
Income tax expense reported in profit or loss 2,563,759 3,616,665 118,834 88,015
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LOLC HOLDINGS PLC
15.2 Numerical Reconciliation of accounting profits to income tax expense

Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Profit/ (loss) before tax expense from continuing 3,376,128 9,549,589 (9,094,021) (3,106,181)
operations
(+)Disallowable expenses 38,007,024 38,629,377 7,820,059 1,685,512
(-)Allowable expenses (12,909,062) (16,590,136) (835,006) (691,363)
(-) Tax exempt income (19,051,328) (20,657,791) (4,175,412) (590,326)
(-) Allowable tax credits (834,463) (1,152,076) - -
(+)Tax losses incurred 15.6 11,464,149 5,513,260 6,284,380 3,034,430
(-)Tax losses utilised 15.6 (1,919,313) (1,628,162) - (332,074)
(-) Others/Consolidation adjustments 2,093,864 (1,603,239) - -
Taxable Income 20,226,999 12,060,821 - -
Income tax @
31% 27,724 51,729 - -
28% 1,276,445 2,142,281 - -
25% 234,395 97,763 - -
24% 258,809 - - -
20% 1,039,128 979,571 - -
17% 440 - - -
14% 6,243 2,554 - -
Total tax expense 2,843,184 3,273,898 - -
Average tax rate 14.06% 27.14% - -
15.3 Current tax expense

Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Tax expense 15.2 2,843,184 3,273,898 - -

(Over provision)/under provision in respect of previous 419,846 192,788 119,456 49,767
years
Irrecoverable economic service charge 1,256 - - -
3,264,286 3,466,686 119,456 49,767
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LOLC HOLDINGS PLC
15.4 Effective Tax Rate

Group Company
Note % % % %
75.94 37.87 (1.31) (2.83)
15.5 A reconciliation of effective tax rate is as follows;

Group
Rs.'000 % Rs.'000 %
Accounting profit/(loss) before income tax 3,376,128 9,549,589

Income tax expense at the average statutory income tax rate 474,561 14.06% 2,592,227 27.14%
Disallowable expenses 5,342,412 158.24% 10,485,906 109.80%
Allowable expenses (1,814,547) (53.75%) (4,503,376) (47.16%)
Tax exempt income (2,677,927) (79.32%) (5,607,537) (58.72%)
Allowable tax credits (117,295) (3.47%) (312,730) (3.27%)
Tax losses incurred 1,611,444 47.73% 1,496,569 15.67%
Tax losses utilised (269,786) (7.99%) (441,963) (4.63%)
Consolidation adjustments 295,577 8.78% (435,198) (4.56%)
Under / (over) provision in respect of previous years 419,846 12.44% 192,788 2.02%
Deferred tax expense (700,527) (20.75%) 149,979 1.57%
Current tax expense 2,563,759 75.94% 3,616,665 37.87%
Company
Rs.'000 % Rs.'000 %
Accounting profit before income tax (9,094,021) (3,106,181)

Deferred tax expense (622) (0.01%) 38,248 (1.23%)
Under / (Over) provision in respect of previous years 119,456 (1.31%) 49,767 (1.60%)
Current tax expense 118,834 (1.30%) 88,015 (2.83%)
154
LOLC HOLDINGS PLC
15.6 Tax Losses

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Losses brought forward 21,490,547 16,753,410 3,438,163 774,242

Adjustments for brought forward tax losses (45,232) 852,040 279,477 (38,435)
Losses incurred 11,464,149 5,513,260 6,284,380 3,034,430
Losses utilised (1,919,313) (1,628,162) - (332,074)
Acquisition of subsidiaries 23,748 - - -
Disposal of subsidiaries (1,821,575) - - -
Discontinued operations 259,170 - - -
Losses carried forward 29,451,494 21,490,547 10,002,020 3,438,163
15.7 Income tax expense

Sri Lankan Operations
The income tax provision for LOLC Holdings PLC, its subsidiaries and equity accounted investees which are resident in Sri Lanka
is calculated in accordance with the provisions of the Inland Revenue Act No. 24 of 2017 and the notice issued by the Department
of Inland Revenue on the instructions of the Ministry of Finance on 12 February 2020 (No. PN/IT/2020-03) on the subject
“Implementation of Proposed Changes to the Inland Revenue Act, No. 24 of 2017”and further amended by the notice No. PN/
IT/2020-03 (Revised) issued by the Department of Inland Revenue dated on 8 April 2020.
As the proposed changes are effective from 01 January 2020, the Department of Inland Revenue has issued a notice No. PN/
IT/2020-06 dated 06 May 2020, providing instructions on the subject “Computation of Income Tax Payable and Payments for the
Year of Assessment 2019/2020”. As per instructions issued, taxable income computed for the full year needs to be apportioned
over the two periods by applying the pro rata basis based on the time (i.e. 9 months and 3 months) and the relevant tax rates for
two periods should be applied. Group has computed the current tax based on above instructions and remitted the tax payments
on the same basis. The Company and the Group has adopted the above on the basis that formal amendments to the Inland
Revenue Act No. 24 of 2017 would be made in the near future.
In terms of above, except for the Companies which are enjoying income tax exemptions or subject to concessionary rates as set
out below, the income tax provisions of companies have been calculated on their adjusted profits at the standard rate of 28% up to
31st December 2019 and 24% thereafter.
Companies exempt from income tax are given in note 15.8.1
Companies liable to income tax at concessionary rates are given in note 15.8.2
Companies incorporated in Sri Lanka and operating outside Sri Lanka are given in note 15.8.3
Income tax concessions of off-shore subsidiaries are given in note 15.8.4
Income tax expense for the year includes, taxes arising from the dividend distributions by resident companies of the Group and any
adjustment relating to income tax payable or receivable balances in respect of previous years. Dividend distributions
made by resident companies of the Group up to 31st December 2019 from its taxable profits are subject withholding tax of 14%
as per section 84 of the Inland Revenue Act No. 24 of 2017. From 1st January 2020, withholding tax on dividend distributions has
been withdrawn and the companies receiving such dividends would be liable for income tax at 14%.
Economic Service Charge (ESC) payable at 0.5% on the relevant turnover has been abolished from 01st January 2020. ESC paid
during the year could be deducted against current income tax liability and any unclaimed amount could be carried forward for a
maximum of two years. Any unclaimed amount within the specified period has been adjusted as an income tax expense together
with any adjustments relating to income tax payable or receivable balances in respect of previous years.
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LOLC HOLDINGS PLC
Deferred tax expense on companies resident in Sri Lanka are calculated based on the tax rates specified in the Inland Revenue Act
No. 24 of 2017 that are expected to be applied to the temporary differences when they reverse. As per guideline issued by CA Sri
Lanka in 2015 on the “Application of Tax Rates in Measurement of Deferred Tax”, substantively enacted rates shall be used in the
measurement of deferred tax.
LKAS 12 – “Income Taxes” and LKAS 10 – “Events after the Reporting Period”, further state that where changes in tax rates or
tax laws are enacted or announced after the reporting period, an entity shall disclose any significant effect of those changes on its
current and deferred tax assets and liabilities.
Right-of-use (ROU) assets and operating lease liability

SLFRS 16 requires a company to recognise a right-of-use asset (lease asset) and a lease liability for operating leases. Over the
lease term, the company recognises amortisation and interest expense as it uses the lease asset and settles the lease liability.
As per section 10 of the Inland Revenue Act No. 24 of 2017, amortisation and the notional interest charged to income statement
would not be allowed for income tax. However, operating lease rentals paid would be a deductible expense for income tax under
section 11 of the Inland Revenue Act No. 24 of 2017.
Accordingly, the income tax treatment on operating leases would result in a temporary difference and deferred tax is recognised. In
addition, the Group has adopted modified retrospective application for the initial date of application (i.e. 01st April 2019) of SLFRS
16 and any deferred tax arising from such adjustments are accounted in the opening balance of retained earnings.
Tax losses carried forward

As per section 19 of the Inland Revenue Act No. 24 of 2017, any unclaimed tax losses incurred during the year could be carried
forward for further six years. In addition, as per the Gazette notification (No. 2064/53) issued on the transitional provisions, any
unclaimed loss as at 31st March 2018, is also deemed to be a loss incurred for the year of assessment commencing on or after
1st April 2018 and shall be carried forward up to 6 years. Such losses can be set off against profits without any limitation but
subjecting to source of income as provided in the Act. As specified above, some companies in the Group have carried forward tax
losses which are available to be set off against the future tax profits of the companies. Adjustment for taxation on the losses from
overseas operations are made in accordance with the provisions of the relevant statutes in those countries.
Companies in the Group have evaluated the recoverability of unclaimed losses through taxable profit forecasts and deferred tax
assets have been recognised accordingly. In reviewing the recoverability of unclaimed losses, Group has evaluated the impact of
COVID-19 pandemic on the future taxable profitability of the companies. Deferred tax assets recognised on tax losses would be
reviewed at each reporting date based on the taxable profit forecasts and would be reduced to the extent of recoverable amount.
15.8 Tax exemptions, concessions or holidays that have been granted

The tax liability of resident companies are computed at the standard rate of 28% except for the following companies which enjoy
full or partial exemptions and concessions.
15.8.1 Companies exempt from income tax

Companies exempt from income tax under the Board of Investment (BOI) Law
Company Basis/ Statute Period
Browns Properties (Pvt) Ltd Section 17 of BOI Law no. 04 of 1978 7 years ending 2020/21
Sagasolar Power (Pvt) Ltd Section 17 of BOI Law no. 04 of 1978 10 years ending 2025/2026
Sun & Fun Resorts Ltd Section 17 of BOI Law no. 04 of 1978 15 years ending 2030/2031
In addition, from 1 January 2020, following new income tax exemptions have been proposed under notice No. PN/IT/2020-03
(Revised) issued by the Department of Inland Revenue, which are available to companies operating in the Group.
The Department of Inland Revenue has issued a notice No. PN/IT/2020-03 (Revised) dated 08th April 2020, proposing to amend
the existing Inland Revenue Act, No. 24 of 2017 effective from 01 January 2020. As per notice issued taxable income from the
Information technology has been exempted with effect from January 01, 2020.
156
LOLC HOLDINGS PLC
15.8.2 Income tax concessions of local subsidiaries

Companies exempt from income tax under the Inland Revenue Act No. 10 of 2006 and amendments there to
Company Concessionary rate and statute Period
Maturata Plantations Ltd 14% under first schedule, item 4(2)(C.) of the of Predominantly conducting an agricultural
Inland Revenue Act No.24 of 2017 business.
Eden Hotel Lanka PLC 14% under first schedule, item 4(2)(f) of the of Predominantly in an undertaking for
Inland Revenue Act No.24 of 2017 promotion of tourism.
Green Paradise (Pvt) Ltd 14% under first schedule, item 4(2)(f) of the of -do-
Inland Revenue Act No.24 of 2017
Dickwella Resorts (Pvt) Ltd 14% under first schedule, item 4(2)(f) of the of -do-
Excel Restaurant (Pvt) Ltd 14% under first schedule, item 4(2)(f) of the of -do-
15.8.3 Income tax concessions of off-shore subsidiaries

Companies incorporated and operating outside Sri Lanka are liable for income tax in accordance with the provisions of the foreign
jurisdictions applicable to our companies. We set out below the Income tax rates applicable for our companies in the foreign
jurisdictions.
It is exempt from Income tax which dividends from and gains on the realisation of shares in a non-resident company where derived
by a resident company with respect to a substantial participation in non-resident company. (Holding 10% or more of shares
together with control, either directly or indirectly, of 10% or more of the voting power in the company) in non-resident company)
Company Country of incorporation Rate
B Commodities MEZ United Arab Emirates Nil

Bodufaru Beach Resort (Pvt) Ltd Republic of Maldives 15%
Browns Ari Resort (Pvt) Ltd Republic of Maldives 15%
Browns Kaafu N Resort (Pvt) Ltd Republic of Maldives 15%
Browns Machinery (Cambodia) Co., Ltd Kingdom of Cambodia 20%
Browns Raa Resort (Pvt) Ltd Republic of Maldives 15%
Grey Reach Investments Ltd (GRIL) British Virgin Islands Nil
LOLC (Pvt) Ltd Republic of Singapore 17% (Max)
LOLC Africa Holdings (Pvt) Ltd - Singapore Republic of Singapore 17% (Max)
LOLC Asia (Pvt) Ltd Republic of Singapore 17% (Max)
LOLC Cambodia Plc Kingdom of Cambodia 20%
LOLC Finance Zambia Limited Republic of Zambia 35%
LOLC Financial Sector Holdings Private Limited Republic of Singapore 17% (Max)
LOLC International (Pvt) Ltd Republic of Singapore 17% (Max)
LOLC Mauritius Holdings Limited Republic of Singapore 17% (Max)
LOLC MEKONG Holdings Private Limited Republic of Singapore 17% (Max)
LOLC Myanmar Micro-Finance Company Limited Republic of the Union of Myanmar 25%
NPH Investments (Pvt) Ltd Republic of Maldives 15%
Pak Oman Micro finance Bank Limited Islamic Republic of Pakistan 31%
PRASAC Micro Finance Institution Limited Kingdom of Cambodia 20%
PT LOLC Management Indonesia Republic of Indonesia 25%
PT Sarana Sumut Ventura Republic of Indonesia 25%
Sunbird Bioenergy (SL) Ltd Republic of Sierra Leone 25%
157
LOLC HOLDINGS PLC
Other miscellaneous concessions

Exemption of gains realisation from sale of quoted shares in any official list published by stock exchange licensed by the Securities
and Exchange Commission of Sri Lanka.
From 01 April 2018, interest or discount earned by any person on any sovereign bond denominated in foreign currency, including
Sri Lanka Development Bonds, issued by or on behalf of the Government of Sri Lanka.
Interest derived in foreign currency on any foreign currency account opened in any commercial bank or in any specialised bank,
with the approval of the Central Bank of Sri Lanka with effect from 01 January 2020.
Dividend paid by a resident company to a member to the extent that dividend payment is attributable to, or derived from, another
dividend received by that resident company or another resident company.
Proposed amendments to the income tax law announced by the Government
As mentioned in note 12.1, the Department of Inland Revenue has issued a notice No. PN/IT/2020-03 (Revised) dated 08 April
2020, proposing to amend the existing Inland Revenue Act, No. 24 of 2017 effective from 01st January 2020. As per notice
issued standard rate for corporate income tax has been reduced from 28% to 24%. Proposed notice also provides income tax
exemptions and concessionary tax rates, which are detailed in note 15.8.1 and 15.8.2 respectively.
Income tax expense excludes, the Group’s share of tax expense of the equity-accounted investees recognised in profit/(loss) of Rs.
1,020million (2018/2019 - Rs. 1,109million) which is included in ‘share of profit of equity-accounted investees (net of tax)’.
15.9 Income tax recognised in other comprehensive income

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Tax (benefit) / expense on;

Other comprehensive income that will never be reclassified
to profit or loss in subsequent periods:
Deferred tax charge/(reversal) on revaluation surplus - 363,563 - -
Deferred tax charge/(reversal) on actuarial gains/(losses) (47,887) 1,323 18,578 1,286
Deferred tax charge/(reversal) on change in fair value on 68,501 80,796 - -
investments in equity instruments at fair value through other
comprehensive income
Other comprehensive income that are or may be

reclassified to profit or loss in subsequent periods:
Deferred tax charge/(reversal) on investment in debt (120) (3,018) - -
instruments financial assets at fair value through other
Deferred tax charge/(reversal) on changes in fair value of cash (30,008) 26,071 - -
flow hedge
(9,514) 468,735 18,578 1,286
Tax recognised directly in equity excludes, the Group’s share of tax expense of the equity-accounted investees recognised directly
in equity.
158
LOLC HOLDINGS PLC
16 Earnings per share

16.1 Basic earnings per share
The calculation of basic earnings per share for the year is based on the profit attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding calculated as follows;
Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Profit attributable to equity holders of the Company

Continuing operations 4,127,279 6,050,113 (9,212,855) (3,194,196)
Discontinued operations 6,766,717 5,240,539 - -
Profit attributable to ordinary equity holders of the 10,893,996 11,290,652 (9,212,855) (3,194,196)
parent for basic earnings
Weighted average number of ordinary shares 16.2 475,200 475,200 475,200 475,200
Earnings per share

Basic, profit for the year attributable to ordinary equity 22.93 23.76 (19.39 ) (6.72 )
Diluted, profit for the year attributable to ordinary 22.93 23.76 (19.39 ) (6.72 )
equity holders of the parent
Earnings per share for continuing operations

Basic, profit for the year attributable to ordinary equity 8.69 12.73 (19.39 ) (6.72 )
Diluted, profit for the year attributable to ordinary 8.69 12.73 (19.39 ) (6.72 )
equity holders of the parent
Earnings per share for discontinued operations

Basic, profit from continuing operations attributable to 14.24 11.03 - -
ordinary equity holders of the parent
Diluted, profit from continuing operations attributable 14.24 11.03 - -
to ordinary equity holders of the parent
16.2 Weighted average number of ordinary shares

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Balance as at 01 April 475,200 475,200 475,200 475,200

Movement during the period - - - -
Balance as at 31 March 475,200 475,200 475,200 475,200
16.3 Diluted earnings per share

There were no potential dilutive ordinary shares outstanding at any time during the year or previous year. Therefore, not presented.
159
LOLC HOLDINGS PLC
17 Cash and cash equivalents

17.1 Cash in hand and favourable bank balances
Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Cash in hand – local currency 575,170 1,645,775 9,540 7,940

Cash in hand – foreign currency 4,971,717 14,675,543 - -
Balances with local banks 13,665,453 22,466,481 1,601,919 937,529
Balances with foreign banks 35,989,282 36,428,929 - -
Other instruments which are less than 3 months maturity 958,203 866,257 - -
Less: Expected credit loss (24,769) - - -
56,135,056 76,082,984 1,611,459 945,468
17.2 Unfavourable bank balances used for cash management purposes

Bank overdrafts (4,022,416) (10,508,019) (1,039,522) (3,629,017)
Net cash and cash equivalents as in cash flow statement 52,112,640 65,574,965 571,937 (2,683,548)
from continuing operations
17.3 Movement in provision for impairment during the year

Movement in Stage 1 Impairment
Balance as at April 01,
Charge/(write back) to the Income Statement 23,374 - - -
Exchange Translation Difference 1,395 - - -
Balance as at March 31, 24,769 - - -
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits and other instruments are
made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group, and
earn interest at the respective short-term deposit rates.
The Group has pledged a part of its short-term deposits to fulfil collateral requirements. Refer to Note 49 for further details.
18 Trading assets - fair value through profit or loss

Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Corporate securities 18.1 4,694,045 5,685,239 - -

Government securities 18.2 8,043 9,009 - -
4,702,088 5,694,248 - -
Equity securities 18.3 1,556,659 1,694,950 263,429 285,735
Derivative assets held for risk management 18.4 380,328 879,882 - -
6,639,075 8,269,081 263,429 285,735
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LOLC HOLDINGS PLC
18.1 Corporate securities

Group
As at 31 March 2020 2019
No. of Cost Fair Value No. of Cost Fair Value
Units Rs.'000 Rs.'000 Units Rs.'000 Rs.'000
Investments in unit trusts 403,923,122 3,568,424 4,210,801 496,697,115 4,655,000 5,225,535

Investment in mutual funds 1,571,015,386 438,101 483,244 1,340,356,803 442,428 459,705
4,006,525 4,694,045 5,097,428 5,685,239
18.2 Government securities

Group
As at 31 March 2020 2019
Cost Fair Value Cost Fair Value
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Investments in treasury bills 6,932 8,043 7,898 9,009

6,932 8,043 7,898 9,009
18.3 Equity securities

Details of the equity trading portfolio
Company
As at 31 March 2020 2019
Manufacturing
Acme Printing & Packaging PLC 25,876 602 70 25,876 602 91
Chemical & Pharmaceuticals

Chemanex PLC 604 81 24 604 81 36
Diversified Holding
Hayleys PLC 1,700,000 667,518 263,330 1,700,000 667,518 285,600
Power & Energy

Laugfs Gas PLC 500 28 5 500 28 8
668,229 263,429 668,229 285,735
161
LOLC HOLDINGS PLC
Group
As at 31 March 2020 2019
Manufacturing
ACME Printing & Packaging 25,876 602 70 25,876 602 91
PLC
Sierra Cables PLC 7,400 22 16 7,400 22 12
Land & Property
C T Land Development PLC 19,500 470 398 - - -
Overseas Realty (Ceylon) PLC 113,680 1,665 1,705 113,680 1,665 1,864
Cargo Boat Development 300 10 36 300 10 36
Company PLC
Chemical & Pharmaceuticals
Chemanex PLC 604 81 24 604 81 36
Construction & Engineering
Colombo Dockyard PLC 4,315 86 217 4,315 86 229
Banking, Finance & Insurance
DFCC Bank PLC 3,848 380 234 3,848 375 269
Hatton National Bank PLC 495 62 56 152 7 84
Nation Lanka Finance PLC 181,327 920 127 181,327 920 89
Vallibel Finance PLC 33,900 497 1,817 33,900 497 2,227
Beverage Food & Tobacco
Raigam Wayamba Salterns PLC 26,200 66 47 26,200 66 50
Diversified Holding
Expolanka Holdings PLC 1,000,000 18,000 2,000 1,000,000 18,000 4,000
Hayleys PLC 2,462,954 884,373 381,492 2,462,849 895,641 413,759
John Keells Holdings PLC 343 26 39 343 26 41
Power & Energy
Lanka IOC PLC 27,800 751 439 27,800 751 484
Laugfs Gas PLC 500 28 5 500 28 8
Plantations
Malwatte Valley Plantations PLC 500 11 2 500 11 5
Hapugastenne Plantations PLC 100 1 1 100 1 2
Motors
Lanka Ashok Leyland PLC 100 295 70 100 295 63
Investment Trust
Ambeon Holdings PLC 100 1 1 100 1 1
Designated equity investment
at Fair Value
Transportation
Digital Mobility (Private) Limited 26,417,846 133,457 1,167,863 26,417,846 133,457 1,269,378
Leisure
Confifi Trading (Private) Limited - - 39 39 2,224
1,041,804 1,556,659 1,052,579 1,694,950
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LOLC HOLDINGS PLC
Quoted equity securities

The COVID 19 pandemic has significantly affected financial markets in the first quarter of the year 2020. Stock markets have
declined sharply and volatility has been increased. Significant drop in trade volumes, decline or absence of a market for new
issuances, decrease in correlations between asset/liability values and related share price indices and subsequent closure of the
Colombo Stock Exchange for trading indicated an inactive stock market as at 31 March 2020. Accordingly, the management
determined that 31 December 2019 share prices would more appropriately reflect their fair value as at 31 March 2020, as
recommended in the Guidance Notes on Accounting Considerations on the COVID-19 outbreak, issued by the Institute of
Chartered Accountants of Sri Lanka.
Government securities
Government securities consist of treasury bills and treasury bonds held for trading purposes which are measured at fair value
through profit or loss and Sri Lanka development bonds which are measured at amortised cost using the effective interest rate.
Bank deposits
Bank deposits include fixed and call deposits which are measured at amortised cost using the effective interest rate. These financial
assets are expected to be recovered through contractual cash flows.
18.4 Derivative assets held for risk management

Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Forward rate contracts

Sales 107,133 311,352 - -
Purchases 273,195 568,530 - -
Total 380,328 879,882 - -
Hedge Accounting
The Group entered in to forward exchange contracts in order to hedge the risk of variability in functional currency equivalent cash
flows associated with the foreign currency- denominated loan. The forward contract is designated as a hedge of the changes in the
cash flows relating to the changes in foreign currency rates relating to the loans.
Details Description of the Hedge
Hedge Instruments Forward foreign exchange contracts
Hedge Items Foreign currency denominated borrowings
The fair value of derivatives designated as cash flow hedges are as follows:
Group
As at 31 March 2020 2019
Assets Liabilities Assets Liabilities
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Forward rate contracts 380,328 114,349 879,882 841,492

Notional amount 4,563,936 15,669,826 8,328,044 13,246,305
163
LOLC HOLDINGS PLC
The maturity analysis of cash flows of the hedge item is given below.
Up to 3 4 to 12 1 to 5 Years Total
Months Months Rs.'000 Rs.'000
Rs.'000 Rs.'000
Forecasted payable cash flows

As at 31 March 2020
Group 17,041,552 5,476,950 - 22,518,502
As at 31 March 2019
Group 18,071,670 19,587,283 4,755 37,663,708
Impact of COVID-19 pandemic on derivative financial liability as at 31 March 2020 is elaborated in detail in note 58 - Financial risk
management objectives and policies.
19 Investment securities
Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Financial assets measured at fair value through 19.1 20,908,173 16,538,650 321,816 294,433
Financial assets at amortised cost 19.2 28,381,713 77,122,105 2,940,045 3,724,642
49,289,886 93,660,755 3,261,861 4,019,075
19.1 Financial assets measured at fair value through other comprehensive income
Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Corporate securities 19.1.1 3,245,240 3,756,210 273 390

Government securities 19.1.2 17,194,717 12,384,716 - -
Designated FVOCI investment securities 19.1.3 244,938 174,436 98,265 70,765
Equity securities with readily determinable fair values 19.1.4 223,278 223,288 223,278 223,278
20,908,173 16,538,650 321,816 294,433
164
LOLC HOLDINGS PLC
19.1.1 Corporate securities

Group
As at 31 March 2020 2019
Rs.'000 Rs.'000 Rs.’000 Rs.’000
Investments in unit trusts 3,114,604 3,244,967 2,449,999 3,755,820

Investment in mutual funds 273 273 390 390
3,114,877 3,245,240 2,450,389 3,756,210
Company
As at 31 March 2020 2019
Rs.'000 Rs.'000 Rs.’000 Rs.’000
Investment in mutual funds 273 273 390 390

273 273 390 390
19.1.2 Government securities

Group
As at 31 March 2020 2019
Rs.'000 Rs.'000 Rs.’000 Rs.’000
Investments in treasury bills 10,680,382 11,550,216 8,442,540 9,858,159

Investments in treasury bonds 5,465,829 5,644,501 2,205,151 2,526,557
16,146,211 17,194,717 10,647,691 12,384,716
19.1.3 Designated FVOCI investment securities

The Group designated certain investments in equity securities as fair value through other comprehensive income as listed below.
This designation was chosen as the investments are expected to be held for the long-term for strategic purposes. Fair value of the
investments are valued using price to book value market multiples at the reporting date.
165
LOLC HOLDINGS PLC
Group
As at 31 March 2020 2019
Shares Rs.'000 Rs.'000 Shares Rs.'000 Rs.'000
Sri Lanka Institute of 9,525,450 137,500 137,500 5,500,000 55,000 55,000

Nanotechnology
Motor Marvels (Pvt) Ltd 4,800,000 4,800 4,800 4,800,000 4,800 4,800
Credit Information Bureau 385 758 558 385 758 548
Limited
Equity Investments Lanka 16,875 173 169 16,875 173 332
Limited
Indo Lanka Steel Limited 200,000 6,000 6,000 200,000 6,000 6,000
Lanka Glass Manufacturing 3,000,000 3,000 3,000 3,000,000 3,000 3,000
Limited
Magpek Exports Limited 250,000 1,000 1,000 250,000 1,000 1,000
Rain Forest Eco Lodge (Private) 6,483,375 64,834 38,051 6,483,375 64,834 51,083
Limited
Ambeon Holdings PLC 18,616 37 37 18,616 37 37
(Preference Shares)
Finance Houses Consortium 20,000 200 200 20,000 200 200
(Private) Limited
Credit Bureau Investment under 28,167 4,281 2,856 28,167 4,281 1,670
CMA
Venture Frontier Lanka 1,575 15,765 15,765 1,575 15,765 15,765
ODOC Private Limited 167,058 50,002 50,002 167,058 50,002 50,002
Provision for impairment (15,000) (15,000) (15,000) (15,000)
19.1.3.1
273,350 244,938 190,849 174,436
Movement in provision for impairment during the year
2020 2019
Rs.'000 Rs.'000
Movement in Stage 1 Impairment 15,000 15,000

Balance as at April 01,
Charge/(write back) to the Income Statement - -
Balance as at March 31, 15,000 15,000
166
LOLC HOLDINGS PLC
Company
As at 31 March 2020 2019
Sri Lanka Institute of 5,500 82,500 82,500 5,500 55,000 55,000

Nanotechnology
Indo Lanka Steel Limited 200,000 6,000 6,000 200 6,000 6,000
Lanka Glass Manufacturing 3,000,000 3,000 3,000 3,000 3,000 3,000
Limited
Magpek Exports Limited 250,000 1,000 1,000 250 1,000 1,000
Venture Frontier Lanka 1,575 15,765 15,765 1,575 15,765 15,765
Provision for impairment (10,000) (10,000)
19.1.3.1
108,265 98,265 80,765 70,765
19.1.3.1 Movement in provision for impairment during the year

2020 2019
Rs.'000 Rs.'000

Balance as at April 01, 10,000 10,000
Charge/(write back) to the Income Statement - -
Balance as at March 31, 10,000 10,000
19.1.4 Equity securities with readily determinable fair values

Group
As at 31 March 2020 2019

The Housing Development and 9,707,740 451,700 223,278 9,707,740 451,710 223,288
Finance PLC
451,700 223,278 451,710 223,288
Company
As at 31 March 2020 2019

The Housing Development and 9,707,740 451,700 223,278 9,707,740 451,700 223,278
Finance PLC
451,700 223,278 451,700 223,278
167
LOLC HOLDINGS PLC
19.2 Financial assets at amortised cost

Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Corporate bonds 19.2.1 3,503,108 5,181,225 165,779 142,717

Government securities 19.2.2 4,827,561 13,645,398 - -
Investments in term deposits 19.2.3 20,051,044 58,295,482 2,774,266 3,581,925
28,381,713 77,122,105 2,940,045 3,724,642
19.2.1 Corporate bonds

Investment in debentures 967,716 1,117,455 - -
Investment in commercial papers 2,553,990 4,082,572 165,779 142,717
Provision for impairment 19.2.1.1 (18,598) (18,802) - -
3,503,108 5,181,225 165,779 142,717

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at April 01, 18,802 18,598
Charge/(write back) to the Income Statement (204) 204 - -
Balance as at March 31, 18,598 18,802 - -
19.2.2 Government securities

Reverse Repo Instruments 4,816,507 13,631,279 - -
Investments in Treasury Bonds 11,054 14,119 - -
4,827,561 13,645,398 - -
When the group purchases a financial asset and simultaneously enters into an agreement to resell the asset (or a substantially
similar asset) at a fixed price on a future date (reverse repo or stock borrowing), the arrangement is accounted for as a loan or
advance, and the underlying asset is not recognised in the group’s financial statements.
168
LOLC HOLDINGS PLC
19.2.3 Investments in term deposits

Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Placements 20,136,774 58,381,212 2,774,266 3 ,581,925

Provision for impairment 19.2.3.1 (85,730) (85,730) - -
Net placements 20,051,044 58,295,482 2,774,266 3 ,581,925

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at April 01, 85,730 - - -
Charge/(write back) to the Income Statement - 85,730 - -
Balance as at March 31, 85,730 85,730 - -
Quoted securities
Colombo Stock Exchange for trading indicated an inactive stock market as at 31 March 2020. Accordingly, the management
determined that 31 December 2019 share prices would more appropriately reflect their fair value as at 31 March 2020, as
recommended in the Guidance Notes on Accounting Considerations on the COVID-19 outbreak, issued by the Institute of
Chartered Accountants of Sri Lanka.
Government securities
Government securities consist of treasury bills and treasury bonds held for liquidity management purposes which are measured at
fair value through other comprehensive income and Sri Lanka development bonds which are measured at amortised cost using the
effective interest rate.
Bank deposits
Bank deposits include fixed and call deposits which are measured at amortised cost using the effective interest rate. These financial
assets are expected to be recovered through contractual cash flows.
169
LOLC HOLDINGS PLC
20 Financial assets at amortised cost/ Finance lease receivables, hire purchases and operating leases
Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Gross Portfolio 60,456,968 57,891,737 12,533 12,750

Stage 1 52,149,531 51,326,059 - -
Stage 2 4,968,503 3,952,372 - -
Stage 3 3,338,934 2,613,305 12,533 12,750
Expected credit loss/impairment allowance 2,355,465 1,659,978 10,093 9,463
Stage 1 562,935 396,143 - -
Stage 2 504,658 337,622 - -
Stage 3 1,287,872 926,213 10,093 9,463
Net Portfolio 58,101,503 56,231,759 2,440 3,287
Analysis of gross portfolio

By product
Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Finance lease receivables 20.1 58,099,062 56,227,521 - -

Hire purchase receivables - 950 - -
Operating lease receivables 20.2 2,440 3,287 2,440 3,287
58,101,502 56,231,759 2,440 3,287
20.1 Finance lease receivables

Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Gross rentals receivable 92,138,207 87,359,612 - -

Unearned finance income (25,213,159) (22,564,465) - -
Net investments in finance leases 66,925,048 64,795,147 - -
Expected credit loss/impairment allowance 20.1.4 (2,345,372) (1,650,515) - -
Prepayments received from lessees (6,480,614) (6,917,111) - -
Balance as at 31 March 58,099,062 56,227,521 - -
170
LOLC HOLDINGS PLC
20.1 Finance lease receivables

Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Receivables within one year 20.1.1 17,480,518 22,103,653 - -

Receivable from one to five years 20.1.2 37,977,162 32,551,925 - -
Overdue rental receivable 20.1.3 4,986,754 3,222,459 - -
Expected credit loss 20.1.4 (2,345,372) (1,650,515) - -
58,099,062 56,227,521 - -
20.1.1 Receivables within one year

17,480,518 22,103,653 - -
20.1.2 Receivable from one to five years

37,977,162 32,551,925 - -
20.1.3 Overdue rental receivable

4,986,754 3,222,459 - -
20.1.4 Expected credit loss/impairment allowance

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Balance as at 1 April 1,650,515 1,143,412 - -

Adjustment on initial application of SLFRS 9 - 551,908 - -
Adjusted balance as at 1 April 1,650,515 1,695,320 - -
Net expected credit loss/impairment during the year 1,111,414 356,828 - -

Net write-off/(recoveries) during the year (427,144) (401,778) - -
Exchange rate variance on foreign currency provisions 103 - - -
Other movements/ Transfers 10,484 145 - -
171
LOLC HOLDINGS PLC
20.1.4.1 Movements in expected credit loss/ Impairment allowance during the year
Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Movement in provision for impairment (under SLFRS 09)

Stage 1
Balance as at 1 April 396,143 282,545 - -
Adjusted balance as at 1 April 396,143 492,927 - -
Charge/(Write back) to income statement 165,649 (96,884) - -

Exchange rate variance on foreign currency provisions 58 -
Balance as at 31 March 562,935 396,143 - -
Stage 2

Stage 3
Charge/(Write back) to income statement 778,731 455,211 - -

Balance as at 31 March 1,277,779 916,750 - -
172
LOLC HOLDINGS PLC
20.2 Operating lease receivables

Group Company
2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Net investments in finance leases 12,533 12,750 12,533 12,750

Expected credit loss (10,093) (9,463) (10,093) (9,463)
20.2 Operating lease receivables

Receivables within one year 20.2.1 1,508 1,597 1,508 1,597
Overdue rental receivable 20.2.2 11,025 11,153 11,025 11,153
Expected credit loss 20.2.3 (10,093) (9,463) (10,093) (9,463)
2,440 3,287 2,440 3,287

Gross rentals receivable (15,156) 1,597 (15,156) 1,597
Unearned finance income 16,664 - 16,664 -
1,508 1,597 1,508 1,597

Gross rentals receivable 11,025 11,153 11,025 11,153
11,025 11,153 11,025 11,153
173
LOLC HOLDINGS PLC
20.20.1 Expected credit loss/impairment allowance

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000

Adjustment on initial application of SLFRS 9 - 3,982 3,982
Adjusted balance as at 1 April 9,463 13,821 9,463 13,821
Net expected credit loss 630 - 630 (4,358)

Other movements/ Transfers - (4,358) - -
20.20.1.1 Movements in expected credit loss

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Stage 3
Adjustment on initial application of SLFRS 9 - 3,982 - 3,982
Charge/(Write back) to income statement 630 - 630 (4,358)

Other movements/ Transfers - (4,358) - -
174
LOLC HOLDINGS PLC
20.4 Total finance lease receivables, hire purchases and operating leases
Group Company
2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Gross rentals receivable 92,134,076 87,373,313 (4,131) 12,750

Unearned finance income (25,196,495) (22,564,465) 16,664 -
Net investments in finance leases 66,937,581 64,808,848 12,533 12,750
Expected credit loss 20.4.4 (2,355,465) (1,659,978) (10,093) (9,463)

Balance as at 31 March 58,101,502 56,231,759 2,440 3,287
20.4 Total finance lease receivables, hire purchases and operating leases
Receivables within one year 20.4.1 17,482,026 22,106,201 1,508 1,597

Receivable from one to five years 20.4.2 37,977,162 32,551,925 - -
Overdue rental receivable 20.4.3 4,997,779 3,233,612 11,025 11,153
58,101,502 56,231,759 2,440 3,287

Gross rentals receivable 30,267,677 34,385,502 (15,156) 1,597
Unearned finance income (12,785,651) (12,279,301) 16,664 -
17,482,026 22,106,201 1,508 1,597
20.4.2 Receivable from one to five years

37,977,162 32,551,925 - -

Gross rentals receivable 4,997,779 3,233,612 11,025 11,153
4,997,779 3,233,612 11,025 11,153
175
LOLC HOLDINGS PLC
20.4.4 Expected credit loss

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Balance as at 1 April 1,659,978 1,155,131 9,463 9,839

Adjusted balance as at 1 April 1,659,978 1,711,021 9,463 13,821
Net expected credit loss 1,112,044 356,828 630 (4,358)

Other movements/ Transfers 10,484 (4,213) - -

Group Company
2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Movements in expected credit loss

Stage 1

Net write-off/(recoveries) during the year - (1,880) - -
Stage 2

176
LOLC HOLDINGS PLC
Group Company
2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Stage 3
Charge/(Write back) to income statement 779,361 455,211 630 (4,358)

Balance as at 31 March 1,287,872 926,213 10,093 9,463
20.5 Analysis of gross portfolio receivables by currency

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Sri Lankan Rupee 60,309,052 57,727,573 12,533 12,750

United States Dollar 147,916 164,164 - -
Gross loans and receivables 60,456,968 57,891,737 12,533 12,750
177
LOLC HOLDINGS PLC
20.6 Concentration by Sector

20.6.1 Lending portfolio
As at 31 March 2020 2019
Finance lease, Expected Total Finance lease, Expected Total
hire purchases credit loss/ hire purchases credit loss/
and operating impairment and operating impairment
leases allowance leases allowance
Rs.'000 Rs.'000 Rs.’000 Rs.'000 Rs.'000 Rs.’000
Group
Industry category
Agriculture and fishing 9,886,004 (337,376) 9,548,628 8,973,065 (226,624) 8,746,441
Arts, entertainment and 299 - 299 - - -
recreation
Construction 4,162,072 (132,466) 4,029,606 4,438,048 (71,013) 4,367,035
Education 4,188 - 4,188 - - -
Financial services 47,266 - 47,266 6,317,252 (178,889) 6,138,363
Healthcare, social services 3,189,561 (104,661) 3,084,900 - - -
and support services
Information technology and 4,749 - 4,749 - - -
communication services
Infrastructure development 178,634 (7,548) 171,086 1,763 (51) 1,712
Lending to overseas 2,149 - 2,149 - - -
entities
Manufacturing 3,092,291 (98,225) 2,994,066 3,124,639 (51,690) 3,072,949
Plantation - - - 612,686 - 612,686
Professional, scientific and 45,390 (745) 44,645 - - -
technical activities
Tourism 496,265 (18,792) 477,473 548,948 (6,038) 542,910
Transport and storage 9,536,757 (358,385) 9,178,372 9,215,031 (202,376) 9,012,655
Wholesale and retail trade 4,847,827 (145,134) 4,702,693 5,541,001 (200,276) 5,340,725
Others 24,963,516 (1,152,133) 23,811,386 19,119,304 (723,021) 18,396,283
60,456,968 (2,355,465) 58,101,503 57,891,737 (1,659,978) 56,231,759
Company
Others 12,533 (10,093) 2,440 12,750 (9,463) 3,287
12,533 (10,093) 2,440 12,750 (9,463) 3,287
178
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21 Financial assets at amortised cost/ Advances and other loans

Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Gross Portfolio 346,296,099 665,930,748 5,552,500 2,522,375

Stage 01 305,946,552 637,724,340 - -
Stage 02 11,309,927 9,440,464 - -
Stage 03 29,039,620 18,765,945 5,552,500 2,522,375
Expected credit loss 14,937,465 14,884,908 41,660 38,718
Stage 1 1,835,300 3,790,245 - -
Stage 2 1,380,270 1,139,164 - -
Stage 3 11,721,896 9,955,500 41,660 38,718
Net Portfolio 331,358,634 651,045,840 5,510,840 2,483,657
Analysis of gross portfolio

by product
Advances and loans 21.1 319,752,014 640,676,197 5,510,840 2,483,657
Factoring receivables 21.2 4,896,713 7,273,787 - -
Gold loan advances receivables 21.3 6,709,908 3,095,856 - -
331,358,634 651,045,840 5,510,840 2,483,657
21.1 Rentals receivable on loans to customers

Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Rentals receivable on loans to customers 328,618,463 657,931,300 5,423,226 2,382,562

Capital outstanding of revolving loans 7,081,739 8,796,178 - -
Gross rental receivables 335,700,202 666,727,478 5,423,226 2,382,562
Future interest (18,161,226) (23,947,154) - -
Net rental receivables 317,538,976 642,780,324 5,423,226 2,382,562
Overdue loan instalments 12,912,509 9,084,888 129,274 139,813
319,752,014 640,676,197 5,510,840 2,483,657
179
LOLC HOLDINGS PLC

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000

Adjustment on initial application of SLFRS 9 - (1,272,037) - (20,552)
Net expected credit loss from continuing operations 5,106,230 3,428,187 2,942 412
Net expected credit loss from discontinued operations 362,829 1,225,828 - -
Net write-off/(recoveries) during the year (1,405,740) (1,003,466) - -
Exchange rate variance on foreign currency provisions 560,756 667,037 - -
Other movements/ Transfers (534,804) (341,684) - -
Reclassified to discontinued operations (4,578,815) - - -

Group Company
2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000

Stage 1
Adjustment on initial application of SLFRS 9 - (1,514,554) - -
Charge/(Write back) to income statement from continuing 900,716 80,214 - -

operations
Charge/(Write back) to income statement from discontinued 921,847 983,113 - -
operations
Other movements/ Transfers (1,031,025) (162,194) - -
180
LOLC HOLDINGS PLC
Group Company
2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Stage 2
Balance as at 1 April 1,023,700 311,800 - -
Adjusted balance as at 1 April 1,023,700 703,968 - -
Charge/(Write back) to income statement from continuing 470,545 367,536 - -

operations
Charge/(Write back) to income statement from discontinued 124,544 10,559 - -
operations
Net write-off/(recoveries) during the year (64,906) - - -
Reclassified to discontinued operations (297,902) - - -
Stage 3
Adjustment on initial application of SLFRS 9 - (149,651) - (20,552)
Charge/(Write back) to income statement from continuing 3,734,969 2,980,437 2,942 412
operations
Charge/(Write back) to income statement from discontinued (683,562) 232,156 - -
operations
Net write-off/(recoveries) during the year (1,303,252) (947,148) - -
21.2 Factoring receivables

Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Factoring receivables 9,024,558 10,921,550 - -

Expected credit loss/impairment allowance 21.2.1 (4,127,845) (3,647,763) - -
181
LOLC HOLDINGS PLC
21.2. Expected credit loss

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000

Net expected credit loss 889,964 2,690,009 - -

Balance as at 31 March - - - -

Group Company
2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000

Stage 1
Charge/(Write back) to income statement (432,100) 386,362 - -

Stage 2
Adjustment on initial application of SLFRS 9 - (34,186) - -
Charge/(Write back) to income statement (23,376) (194,526) - -

Stage 3
Balance as at 1 April 2,998,228 736,154 - -
Adjusted balance as at 1 April 2,998,228 863,652 - -
Charge/(Write back) to income statement 1,345,440 2,498,172 - -

182
LOLC HOLDINGS PLC
21.3 Gold loan advances receivables

Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Gross receivables 6,820,056 3,143,986 - -

Expected credit loss/impairment allowance 21.3.1 (110,148) (48,130) - -

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000

Net expected credit loss 62,019 27,873 - -

Other movements/ Transfers (1) (15,166) - -

Group Company
2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000

Stage 1
Balance as at 1 April 14,076 8,375 -
Adjustment on initial application of SLFRS 9 - (470) - -

Other movements/ Transfers (7,172) - - -
Stage 2
Adjustment on initial application of SLFRS 9 - (185) - -

Other movements/ Transfers (5,969) (15,166) - -
183
LOLC HOLDINGS PLC
Group Company
2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Stage 3

Other movements/ Transfers 13,140 - - -
21.4 Analysis of gross advance and other loans receivables by currency

Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Sri Lankan Rupee 168,001,387 164,249,522 5,552,500 2,522,375

United States Dollar 115,416,007 424,508,755 - -
Cambodian Riel 35,966,805 49,429,886 - -
Pakistani Rupee 2,217,097 1,835,481 - -
Myanmar Kyat 14,673,790 6,949,422 - -
Indonesian Rupiah 736,839 412,475 - -
Others 9,284,174 18,545,207 - -
Gross loans and receivables 346,296,099 665,930,748 5,552,500 2,522,375
21.5 Interest Income on Impaired Financial Assets

Interest income on impaired financial assets accrued during the current financial year amounted to 948.25mn
21.6 Maturities of the total advances and other loans

Advances and Factoring Pawning Advances and Factoring Pawning
loans receivables advances loans receivables advances
Rs.'000 Rs.'000 Rs.’000 Rs.'000 Rs.'000 Rs.’000
Receivables within one year 86,877,850 7,383,264 6,820,056 178,520,633 9,843,972 3,143,679
Receivable from one to five 230,277,282 974,133 - 435,800,926 1,077,578 -
years
Receivable later than five years 3,354,364 667,162 - 29,966,872 - -
Overdue rental receivable 9,941,989 - - 7,576,783 - -
Less : Expected credit loss (10,699,471) (4,127,845) (110,148) (11,189,015) (3,647,763) (48,130)
319,752,014 4,896,713 6,709,908 640,676,199 7,273,787 3,095,549
184
LOLC HOLDINGS PLC
21.7 Concentration by Sector

2020 2019
Gross Expected Carrying Gross Expected Carrying
amount credit loss amount amount credit loss amount
Rs.'000 Rs.'000 Rs.’000 Rs.'000 Rs.'000 Rs.’000
Agriculture and fishing 79,294,720 (2,410,163) 76,884,557 110,521,528 (862,634) 109,658,894

Arts, entertainment and 3,366 - 3,366 - - -
recreation
Construction 27,109,835 (854,893) 26,254,942 14,344,709 (363,502) 13,981,207
Education 50,710 (766) 49,944 6,197 (80) 6,117
Financial services 501,547 (40,075) 461,472 20,921,999 (579,511) 20,342,488
Healthcare, social services 31,954,304 (813,175) 31,141,129 69,401,164 (446,902) 68,954,262
and support services
Information technology and 42,509 (7) 42,502 78 (1) 77
communication services
Infrastructure development 2,469,067 (105,879) 2,363,188 29,131 (2,581) 26,550
Lending to overseas 11,150 - 11,150 - - -
entities
Manufacturing 18,821,126 (1,290,097) 17,531,029 18,823,846 (871,466) 17,952,380
Plantation 5,376,718 (652) 5,376,066 11,961,740 (577,239) 11,384,501
Professional, scientific and 439,956 (2,019) 437,937 9,939 - 9,939
technical activities
Tourism 3,038,159 (181,585) 2,856,574 2,808,368 (56,558) 2,751,810
Transport and storage 13,979,475 (400,849) 13,578,626 32,230,674 (352,746) 31,877,928
Wholesale and retail trade 75,990,165 (2,641,063) 73,349,102 129,928,410 (3,047,341) 126,881,069
Others 87,213,292 (6,196,242) 81,017,050 254,942,965 (7,724,347) 247,218,618
346,296,099 (14,937,465) 331,358,634 665,930,748 (14,884,908) 651,045,840
22 Insurance premium receivables

Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Insurance premium receivables 1,622,913 1,315,329 - -

Expected credit loss/impairment allowance (92,218) (87,822) - -
1,530,695 1,227,507 - -
Fair value of premium receivables

The carrying amount disclosed above approximates the fair value at the reporting date.
Collateral details
The company does not hold any collateral as security against potential default by policyholders or intermediaries.
185
LOLC HOLDINGS PLC
22.1 Expected credit loss

Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Balance at 01 April 87,822 77,659 - -

Provision for the period 4,396 10,163 - -
23 Inventories
Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Raw materials 1,011,073 740,652 370,956 228,538

Work-in-progress 447,900 153,216 - -
Finished goods and trading stocks 3,737,901 4,120,488 11,024 40,544
Input materials 33,011 56,478 879 880
Ethanol 1,038,930 - - -
Harvested crops
- Tea 161,371 220,429 - -
- Rubber 6,842 8,563 - -
- Coconut 4 292 - -
- Cinnamon 106 1,129 - -
- Commercial cane 89,126 - - -
Unharvested produce stock at fair value 14,680 14,841 - -
Consumables, maintenance and spares 1,208,677 19,720 - -
Vehicle stocks 68,149 106,336 54,702 71,027
Food and beverages 30,467 19,388 - -
Goods in transit 219,946 806,542 - -
Others 11,088 305,972 - -
8,079,271 6,574,045 437,561 340,989
Allowance for slow moving inventories 23.1 (870,499) (340,429) (57,182) -
7,208,772 6,233,616 380,379 340,989
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LOLC HOLDINGS PLC
23.1 Allowance for slow moving inventories

Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Balance at 01 April 340,429 189,982 - -

Provision for the period 482,825 151,135 57,182 -
Write offs / (write backs) (4,366) (688) - -
Acquisition of Subsidiaries 50,000 - - -
Disposal of Subsidiaries (378) - - -
Foreign currency translations 1,989 - - -
Balance as at 31 March 870,499 340,429 57,182 -
The Group has identified companies with COVID-19 related revenue declines or disrupted supply chains and evaluated whether it
is required to adjust the carrying value of the inventory. perishables, products with short shelf lives or expiration dates, or specific
seasonal inventories were considered at risk of an impairment. The Group has adjusted the carrying value of the inventory to reflect
its net realisable value.
The Group evaluated the companies with COVID-19 related revenue declines and/or the nature of the inventories carried and
assessed whether it was required to adjust the carrying value of the inventory prior to reflecting them at the lower of cost or net
realisable value. Where applicable, declines in inventory values were recognised in the income statement.
24 Current tax assets

Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Income tax recoverable 24.1 67,515 47,810 - -

Value added tax (VAT) recoverable 779,224 810,188 14,488 99,603
Advanced Corporate Tax (ACT) recoverable 1,840 - - -
With-holding tax (WHT) recoverable 434,445 163,061 46,499 35,258
Economic service charge (ESC) recoverable 396,463 324,650 137,837 81,059
Nation building tax (NBT) recoverable - 558 - -
Other tax recoverable 371,796 104,293 - -
2,051,283 1,450,561 198,824 215,920
24.1 Income tax recoverable

Balance at the beginning of the year 47,810 31,878 - -
Transfer to Income Tax Payables (33,378) - - -
Under provision in respect of previous years (67,216) - - -
Provision for the Period (10,191) (9,685) - -
Payments made during the year 130,780 22,515 - -
Foreign currency translations (290) 3,102 - -
Balance at the end of the year 67,515 47,810 - -
187
LOLC HOLDINGS PLC
25 Trade and other current assets

Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Financial Assets
Trade receivables 25.1 7,675,395 10,199,637 632,706 493,854
Amount due from related parties 51.3.1 2,552,061 4,021,438 31,973,061 16,618,328
Loans given to employees 25.2 232,698 466,188 3,937 7,947
Refundable deposits 25.3 74,486 90,159 - -
Dividend receivables 1,015 92,808 - -
Insurance commission receivable 27,353 346,894 - -
Re-insurance receivable 719,085 264,143 - -
Other financial receivables 618,173 1,476,447 72,618 184,524
11,900,266 16,957,713 32,682,322 17,304,653
Non-financial Assets
Prepayments & advances 6,593,121 5,204,169 302,135 229,999
Prepaid staff costs 25.4 123,704 190,237 - -
Non refundable deposits 133,613 80,692 - -
Other non-financial receivables 396,446 597,478 10,824 55,349
7,246,884 6,072,576 312,959 285,348
19,147,150 23,030,289 32,995,281 17,590,001
25.1 Trade receivables

Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Trade receivables 8,930,011 11,276,381 641,832 498,809

Expected credit loss 25.1 (1,254,616) (1,076,743) (9,126) (4,955)
7,675,395 10,199,637 632,706 493,854
188
LOLC HOLDINGS PLC

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Balance as at 1 April 1,076,743 748,327 4,955 -

Adjustment on initial application of SLFRS 9 - - - -
Adjusted balance as at 1 April 1,076,743 748,327 4,955 -
Net expected credit loss/impairment during the year 415,580 102,380 4,171 -
Interest accrued on impaired loans and advances 319 - - 4,955
Other movements/ Transfers 65,657 237,879 - -
Acquisition of Subsidiaries - (3,575) - -
Disposal of Subsidiaries (2,810) - - -
Exchange rate variance on foreign currency provisions 4,301 - - -

Allowances for individually significant impairment
Balance as at 1 April 424,940 187,553 4,955 -
Charge/(Write back) to income statement 119,305 25,892 4,171 -
Interest accrued/(reversals) on impaired loans and advances 319 - - 4,955
Other movements/ Transfers (10,387) 231,204 - -
Acquisition of Subsidiaries - (3,575) - -
Exchange rate variance on foreign currency provisions 4,301 - - -
Allowances for individually non-significant impairment

Net write-off/(recoveries) during the year (72,150) 7,866 - -
Other movements/ Transfers 76,044 6,675 - -
189
LOLC HOLDINGS PLC
25.2 Loans given to employees

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Balance at 01 April 466,188 428,914 7,947 5,819

Granted during the period 2,757,929 604,401 1,001 6,532
Recovered during the period (3,006,622) (567,127) (4,734) (2,116)
Adjustment of fair value of prepaid staff cost 3,157 - - -
Transfers and other adjustments 14,333 - (277) (2,288)
25.3 Refundable deposits

Balance at 01 April 90,159 55,738 - -
Additions during the period 29,874 35,121 - -
Adjustment of fair value 1,488 - - -
Refunded during the period (44,716) (700) - -
25.4 Prepaid staff costs

Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Balance at 01 April 190,237 125,461 - -

Addition from loan granted 25.2 6,506 133,841 - -
Amortised to profit or loss 59,877 45,177 - -
Other Adjustments (132,916) (114,242) - -
123,704 190,237 - -
Impact of COVID-19 pandemic on trade and other receivable balance as at 31 March 2020 is elaborated in detail in note 58 -
Financial risk management objectives and policies.
190
LOLC HOLDINGS PLC
26 Prepaid lease rentals on leasehold properties

Group
As at 31 March 2020 2019
Rs.'000 Rs.'000
Cost
Balance at the beginning of the period 2,641,322 2,339,851
Transfer (to)/from Investment Property (4,800) -
Transfer to Right to use assets (2,636,522) -
Transfer (to)/from Property, Plant and Equipment - (130,012)
Transfers and other movements - 137,083
Foreign currency translations 294,400
Balance at the end of the period - 2,641,322
Accumulated amortisation
Balance at the beginning of the period 235,587 33,990
Transfer (to)/from Investment Property (800) -
Transfer to Right to use assets (234,787) -
Amortisation for the period from continuing operations - 2,262
Amortisation for the period from discontinued operations - 4,229
Transfer (to)/from Property, Plant and Equipment - 37,620
Transfers and other movements - 137,083
Foreign currency translations - 20,403
Balance at the end of the period - 235,587
Carrying Amount
As at 31 March - 2,405,735
191
LOLC HOLDINGS PLC
27 Right to use assets

Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Cost
Balance at the beginning of the period - - - -
Recognition on initial application of SLFRS 16 - Leases 10,099,941 - 669,495 -
Transferred from prepayments 144,277 - 64,790 -
Transferred from lease equalisation (858,056) - - -
Transferred from leasehold properties (note 26) 2,422,821 - - -
Adjusted balance as at 01st April 2019 11,808,983 - 734,285 -
Additions during the period 1,436,934 - 28,100 -
Reversal on early termination (17,551) - - -
Exchange Differences 578,896 - - -
Balance at the end of the period 9,940,208 - 762,385 -
Balance at the beginning of the period - - - -
Recognition on initial application of SLFRS 16 - Leases 1,061,364 - - -
Transferred from leasehold properties (note 26) 21,086 - - -
Adjusted balance as at 01st April 2019 1,082,450 - - -
Amortisation for the period from continuing operations 638,061 - 120,023 -
Amortisation for the period from discontinued operations 672,474 - - -
Transferred to Property, Plant and Equipment 114,856 - - -
Reversal on early termination (1,470) - - -
Disposal of Subsidiaries (269) - - -
Exchange Differences 112,851 - - -
1,096,009 - 120,023 -
Balance at the end of the period 8,844,199 - 642,362 -
Prepaid lease rentals paid to acquire land use rights have been classified as lease rentals paid in advance and are amortised over the
lease term.
192
LOLC HOLDINGS PLC
27.1 Maturity analysis – Contractual undiscounted cash flows

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Less than one year 1,279,847 - 144,329 -

Between one and five years 4,212,347 - 685,231 -
More than five years 24,746,321 - 134,638 -
30,238,514 - 964,198 -
27.2 Amount recognised in income statement

As per SLFRS 16 – Leases
Interest on lease liabilities 878,355 - 83,239 -
Recognised in interest expenses 878,355 - 83,239 -
Amortisation of right-of-use assets from continuing operations 638,061 - 120,023 -

Amortisation of right-of-use assets from discontinued 672,474 - - -
operations
Recognised in depreciation and other expenses 1,310,535 - 120,023 -
As per LKAS 17 – Leases

Lease expense 270,856 - 175,717 -
Recognised in other expenses 270,856 - 175,717 -
Total amount recognised in income statement 2.459.746 - 378,979 -
27.3 Amounts recognised in cash flow statement

Payment for lease liabilities 1,648,354 - 126,986 -
1,648,354 - 126,986 -
Details of right-of-use assets relating to leased properties
The Group leases office space, office equipment, motor vehicles etc. with contract terms of one to five years. These leases are
either short term (term leases than one year) and/or leases of low-value items. The Group has elected not to recognise right-of-use
assets and lease liabilities for these leases.
* With the implementation of SLFRS 16 - Leases, the Group has transferred its acquisition cost of leasehold rights and prepaid
lease extension fees to right-of-use assets as of 01 April 2019.
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28 Investment properties
Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Balance at the beginning of the year 26,383,374 14,352,331 956,125 882,500

Additions 2,306,752 3,087,946 33,192 1,621
Transferred from leasehold properties (note 26) 4,000 - - -
Additions to Investment Properties from foreclosure of 844,055 2,425,017 - -
contracts
Disposals of subsidiaries (4,939) (315,834) - -
Transfers (to)/from property plant and equipment (1,724,968) 2,763,552 - -
Exchange translation difference - 2,437 - -
Change in fair value during the year 3,915,140 4,067,925 27,933 72,004
Balance at the end of the year 31,723,414 26,383,374 1,017,250 956,125
Investment property comprises of number of commercial properties that are leased / rented out to third parties. Each of the
agreement contains an initial non-cancellable period of one year. Subsequent renewals are being negotiated with the lessee and on
average renewal periods considered are three to five years.
28.1 Details of investment properties

Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Owned properties 24,446,363 19,879,374 1,017,250 956,125

Properties held under operating leases 7,277,051 6,504,000 - -
31,723,414 26,383,374 1,017,250 956,125
28.2 Summary of Investment Properties

Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Land 23,773,103 20,769,312 629,784 573,241

Building 7,950,311 5,614,062 387,466 382,884
31,723,414 26,383,374 1,017,250 956,125
28.3 Relevant income and expenditure relating to investment properties

Group
Rs.'000 Rs.'000
Rent income earned 475,840 463,764

Direct operating expenses generating rental income 22,581 61,112
Direct operating expenses not generating rental income 19,463 64,623
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LOLC HOLDINGS PLC
28.4 Valuation of investment properties

Fair value of the investment properties are ascertained by independent valuations carried out by Chartered valuation surveyors,
who have recent experience in valuing properties of similar kind of location and category. Investment property is appraised in
accordance with SLFRS 13, LKAS 40 and the 8th edition of International Valuation Standards published by the International
Valuation Standards Committee (IVSC), by the independent valuers.
In determining the fair value, the current condition of the properties, future usability and associated re-development requirements
have been considered. Also, the valuers have made reference to market evidence of transaction prices for similar properties, with
appropriate adjustments for size and location. The appraised fair values are rounded within the range of values.
The fair value measurement for all of the investment properties has been categorised as a Level 3 fair value based on the inputs to
the valuation techniques used.
The following table shows the valuation techniques used in measuring the fair value of investment property, as well as the significant
unobservable inputs used.
Valuation Technique Significant observable and unobservable inputs Interrelationship between key inputs and
fair value measurement
Sales comparison method Per perch value was derived based on similar The estimated fair value would increase
- value derived based on property values. The value of a perch in the (decrease) if:
recent transactions of similar property portfolio ranges from Rs.104,000 - comparable property value was higher /
properties to Rs.30,000,000 in the Colombo area and (lesser)
Rs.18,000 to Rs.4,026,000 outside the Colombo
area.
Depreciated replacement Value per square feet determined based on The estimated fair value would increase
cost method similar properties value and depreciated for (decrease) if:
period used. The value of a square feet in the - Depreciation rate was lesser / (higher)
property portfolio ranges from Rs. 2,500 to - Square feet value was higher / (lesser)
Rs.13,500 in the Colombo area and Rs. 750 to
Rs. 7,500 outside the Colombo area.
Net income approach Net rental income (profit rent) determined based The estimated fair value would increase
on similar properties value and decapitalisation (decrease) if:
rate and years of purchase for period used - Decapitalisation rate was lesser / (higher)
Discount rate - 7% - 9% - Years of purchases were higher / (lesser)
Annual Rental Income - Rs. 65 Mn - Rs. 155 Mn - Discount rate was lesser / (higher)
- Annual rental income were higher / (lesser)
Under prevailing circumstances, it is premature to ascertain the full impact COVID-19 would have on the real estate market as the
pandemic continues to evolve. However, all the available information in the market have been taken into account in determining the
fair value of the properties as at the reporting date by the Property Valuer.
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LOLC HOLDINGS PLC
29 Consumable biological assets

Group
Balance as at 01 April 3,788,540 3,305,919

Increase due to new planting and re-planting 53,700 83,831
Decrease due to harvesting of timber trees (58,000) (50,302)
Net increase due to births/deaths (Growing Crop Nurseries) (4,426) 10,017
Change in fair value 29.1 (136,816) 439,076
Balance as at 31 March 3,642,998 3,788,540
29.1 Change in fair value less estimated costs to sell

Group
As at 31 March 2020 2019
Rs.'000 Rs.'000
Due to price changes (40,292) 129,308

Due to physical changes (96,524) 309,768
(136,816) 439,076
29.1.1 The carrying value of Consumable biological assets as at the year end has been computed as follows;
Group
As at 31 March 2020 2019
Valuation of consumer biological assets 3,422,004 3,609,019

Cost of timber plant below three years of age, not considered for valuation 208,202 162,303
Growing Crop Nurseries 29.1.2 12,792 17,218
3,642,998 3,788,540
Managed timber trees include commercial timber plantations cultivated on estates. The above carrying amount as at 31 March
2020 includes a sum of Rs. 208.2mn- (As at 31 March 2019 - Rs. 161.6mn) which is the cost of immature trees up to the age of 4
years which is treated as approximate fair value particularly on the ground of little biological transformation taking place and impact
of such transformation on price is expected to be immaterial.
Borrowing costs of Rs. 23.3mn (Previous year - Rs. 16.2mn) have been capitalised during the year in to immature fields.
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LOLC HOLDINGS PLC
29.1.2 Growing crop nurseries

Group
2020 2019
Rs.'000 Rs.'000
Balance as at 01 April 17,218 7,201

Additions (4,426) 10,017
Balance as at 31 March 12,792 17,218
29.1.3 Plantation area

Group
2020 2019
Ha. Ha.
Mature plantations 805.25 791.63

Immature Plantations 242.33 203.58
1,047.58 995.21
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LOLC HOLDINGS PLC
29.2 Valuation techniques and significant unobservable inputs

Following table shows the valuation techniques in measuring Level 3 fair value of consumable biological asses as well as the
significant unobservable inputs used.
Discounted cash flows Determination of Timber Content The estimated fair value would increase /
The valuation model Timber trees in inter-crop areas and pure crop (decrease) if;
considers present value areas have been identified field-wise and spices - the estimated timber content were higher/
of future net cash flows were identified and harvestable trees were (lower)
expected to be generated separated, according to their average girth and - the estimated timber prices per cubic meter
by the plantation from the estimated age. were higher/(lower)
timber content of managed - the estimated timber prices per cubic meter
timber plantation on a tree- were higher/(lower)
per-tree basis .
Expected cash flows are Timber trees that have not come up to a - the estimated selling related costs were
discounted using a risk- harvestable size are valued working out the lower/(higher)
adjusted discount rate of period that would take for those trees to grow up - the estimated maturity age were higher/
14.5% comprising a risk to a harvestable size. (lower)
premium of 4%. - the risk-adjusted discount rate were lower/
(higher)
Determination of Price of Timber
Trees have been valued as per the current timber
prices per cubic meter based on the price list
of the State Timber Corporation and prices of
timber trees sold by the estates and prices of
logs sawn timber at the popular timber traders in
Sri Lanka.
In this exercise, following factors have been taken
into consideration.
a) Cost of obtaining approval of felling
b) Cost of felling and cutting into logs
c) Cost of transportation
d) Sawing cost
Risk-adjusted discount rate
2019/2020 - 14.5% (Risk Premium - 4%)
2018/2019 - 15% (Risk Premium - 4%)
29.3 The valuation of consumable biological assets was carried by Mr. W.M Chandrasena, an independent Chartered Valuation Surveyor,
using Discounted Cash Flow (DCF) methods. The Valuation Report dated 10th July, 2020 is prepared on the physically verified
timber statistics provided by the Group.
29.4 Timber Trees namely Eucalyptus Torariyana, Albezzia, Graveelia, Eucalyptus Grandis, Astonia, Pinus, Toona, Mahogany, Teak,
Jack, Turpentine, Nadun, Mango, Pellen, Hora, Domba, Lunumidella, Wal Del and Mara on the plantations have been taken into
consideration in this valuation of Timber Trees.
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LOLC HOLDINGS PLC
29.5 In valuing the timber plantations, under-mentioned factors have been taken into consideration.
1 The present age of trees
2 Maturity age of the tree - Maturity of the tree is based on the variety of the species of the tree
3 Annual marginal increase in timber content
4 Number of years to harvest
5 Timber content of harvestable trees on maturity
6 Timber Plants having below three years of age have not been taken into the valuation
7 The timber content of immature trees at an estimated future harvestable year
8 The current price of species of timber per cubic foot at the relevant year
29.6 Trees have been valued as per the current timber prices in the domestic market based on the price list of the State Timber
Corporation and prices of timber trees sold by estates and prices of logs and sawn timber in the popular timber traders in Sri
Lanka.
29.7 The fair value is determined on the basis of net present value of expected future cash flows using a discount rate of 15% per
annum. The significant assumptions used in the valuation of Consumable Biological Assets are as follows:
1 Future cash flows are determined by references to current timber prices without considering the inflationary effect
2 The ongoing cost of growing trees which are deducted in determining the net cash flows are constant in real terms
3 Timber trees that have not come upto a harvestable size are valued working out the period that would take for those trees to grow
up to a harvestable size
4 The present value of the trees is worked out based on the projected size and the estimated number of years it would take to reach
the size. This is worked out on the basis of an annual marginal increase of timber content which normally ranges from 0.50 to 1.50
cm per year for trees of diameter girth over 10 cm
5 The value of each matured species of timber is worked out on the price of a cubic foot of timber in the market of the species and
the available cubic content of timber in the tree
6 Due consideration has been given for cost of felling, transport, sawing, cost to sell including obtaining of approval for felling
29.8 Managed trees include commercial timber plantations cultivated in estates. The cost of immature trees is treated at approximate
fair value particularly on the ground of little biological transformation has taken place and impact of the biological transformation on
price is not material. When such Plantations become mature, the additional investments since taken over to bring them to maturity
are transferred from immature to mature.
29.9 The fair value of managed trees was ascertained since LKAS 41 is only applicable for managed agricultural activity in terms of the
ruling issued by the Institute of Chartered Accountants of Sri Lanka. The valuation was carried but by using Discounted Cash Flow
(DCF) methods. In ascertaining the fair value of timber a physical verification was carried out covering all the estates.
29.10 The valuations, as presented in the external valuation models based on net present values, take into account the long-term
exploitation of the timber plantation. Because of the inherent uncertainty associated with the valuation at fair value of the biological
assets due to the volatility of the variables, their carrying value may differ from their realisable value. The Board of Directors retains
their view that commodity markets are inherently volatile and that long-term price projections are highly unpredictable. Hence, the
sensitivity analysis regarding selling price and discount rate variations as included in this note allows every investor to reasonably
challenge the financial impact of the assumptions used in LKAS 41 against his own assumptions.
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LOLC HOLDINGS PLC
29.11 The biological assets of Group is cultivated in the leasehold lands. When measuring the fair value of the biological assets it was
assumed that these concessions can and will be renewed at normal circumstances. Timber content expects to be realised in future
and is included in the calculation of the fair value that takes into account the age of the timber plants and not the expiration date of
the lease.
29.12 Sensitivity analysis for biological assets

29.12.1 Sensitivity variation on sales price
Values as appearing in the Statement of Financial Position are sensitive to price changes with regard to the average sales prices
applied. Simulation made for timber to show that a rise or a decrease by 10% of the estimated future selling price has the following
effect on the net present value of biological assets:
Group
As at 31 March 2020 2019
Carrying amount 29.1.1 3,642,998 3,788,540

Sensitivity on sales price
+10% 342,207 360,974
-10% (342,207) (360,974)
29.12.2 Sensitivity variation on discount rate

Values as appearing in the Statement of Financial Position are sensitive to changes of the discount rate applied. Simulations made
for rubber, coconut and timber show that a rise or decrease by 1% of the estimated future discount rate has the following effect on
the net present value of biological assets;
Group
As at 31 March 2020 2019
Carrying amount 29.1.1 3,642,998 3,788,540

Sensitivity on sales price
+1% (77,573) (94,919)
-1% 85,900 105,897
29.13 Risk factors

The Group is exposed to a number of risks related to its timber plantations;
Regulatory and environmental risks

The Group is subject to laws and regulations imposed by the environmental authorities of Sri Lanka. The Group established
environmental policies and procedures aimed at compliance with local environmental and other laws. Management performs
regular reviews to identify environmental risks and to ensure that the systems in place are adequate to manage those risks.
Supply and demand risk

The Group is exposed to risks arising from fluctuations in the price and sales volume of timber. When possible Group manages
this risk by aligning its harvest volume to market supply and demand. Management performs regular industry trend analyses to
ensure that Group’s pricing structure is in line with the market and to ensure that projected harvest volumes are consistent with the
expected demand.
200
LOLC HOLDINGS PLC
Climate and other risks

The Group’s timber plantations are exposed to the risk of damage from climatic changes, diseases, forest fires and other natural
forces. The Group has extensive processes in place aimed at monitoring and mitigating those risks, including regular forest health
inspections and industry pest and disease surveys.
Given the impact of COVID-19, the Group’s consumable plants and biological assets as at 31 March 2020 was subject to
impairment testing which concluded that no material impairment was required.
30 Bearer biological assets

Group
As at 31 March 2020 2019
On finance lease 30.3 26,350 34,346

Investments after formation of the plantation companies 30.4 2,113,993 1,221,921
Growing crop nurseries 30.5 4,209 3,612
2,144,552 1,259,879
30.1 Amortisation/ depreciation for the period recognised for bearer biological assets
Group
As at 31 March 2020 2019
On finance lease 30.3 7,194 7,394

Investments after formation of the plantation companies 30.4 286,525 41,206
293,719 48,600
30.2 Carrying amount of bearer biological assets

On finance Investments Growing crop 2019/20 2018/19
lease after formation nurseries Total Total
30.3 30.4 30.5
Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.’000
Cost 213,876 6,268,022 4,209 6,486,107 1,873,197

Accumulated depreciation (187,526) (4,154,029) - (4,341,555) (613,317)
Carrying amount 26,350 2,113,993 4,209 2,144,552 1,259,879
201
LOLC HOLDINGS PLC
30.3 On finance lease

Mature plantations
Tea Rubber Coconut 2019/20 2018/19
Total Total
Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.’000
Cost
Balance as at 01 April 203,272 7,273 8,271 218,816 224,216
Disposal - (4,940) - (4,940) (5,400)
Balance as at 31 March 203,272 2,333 8,271 213,876 218,816
Accumulated depreciation
Balance as at 01 April 171,494 6,050 6,927 184,471 181,591
Charge for the year from continuing operations 6,801 117 276 7,194 7,394
Disposal - (4,139) - (4,139) (4,515)
Balance as at 31 March 178,295 2,028 7,203 187,526 184,470
Carrying amount 24,977 305 1,068 26,350 34,346
30.4 Investments after formation of the plantation companies

Immature Plantations
Tea Rubber Cinnamon Mixed crops 2019/20 2018/19
Total Total
Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.’000
Cost
Balance as at 01 April 13,289 228,542 140,548 17,402 399,781 395,921
Additions / transfer in from growing 6,150 4,734 97,126 2,707 110,717 108,319
crop nurseries
Transfer out (2,943) (85,156) (113,741) - (201,840) (100,668)
Written off during the year - (78,840) - (17,054) (95,894) (3,792)
Balance as at 31 March 16,496 69,280 123,933 3,055 212,764 399,780
These are investments in immature/ mature plantations before the formation of Maturata Plantations Ltd. These assets (including
plantation assets) taken over by way of estate leases are set out in Note 34.3. Further investments in immature plantations taken
over by way of these leases are shown in the above note. When such plantations become mature, the additional investments, since
initial investment to bring them to maturity, will be moved from immature to mature under this note.
202
LOLC HOLDINGS PLC
Mature Plantations
Tea Rubber Coconut Cinnamon Mixed Sugar Cane 2019/20 2018/19
crops Total Total
Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Cost
Balance as at 01 April 739,614 295,701 15,646 172,070 27,958 - 1,250,989 1,155,608
Additions - - - - - 445,805 445,805 -
Transfer in/(out) 2,943 85,156 - 113,741 - - 201,840 100,668
Written Offs - - - - (27,958) - (27,958) -
Disposals - (10,239) - - - - (10,239) (5,286)
Changes due to Business - - - - - 4,009,585 4,009,585 -
Combinations
Exchange Differences - - - - - 185,236 185,236 -
Balance as at 31 March 742,557 370,618 15,646 285,811 - 4,640,626 6,055,258 1,250,989
Balance as at 01 April 312,121 86,823 4,820 14,813 10,271 - 428,848 388,353
Charge for the year from 24,705 14,340 412 5,932 - 241,136 286,525 41,206
continuing operations
Charge for the year from - - - - 4,217 - 4,217 4,061
Written Offs - - - - (14,488) - (14,488) -
Disposals - (8,988) - - - - (8,988) (4,773)
Changes due to Business - - - - - 3,316,406 3,316,406 -
Combinations
Exchange Differences - - - - - 141,509 141,509 -
Balance as at 31 March 336,826 92,175 5,232 20,745 - 3,699,051 4,154,029 428,847
Carrying Amount
As at 31 March 405,731 278,443 10,414 265,066 - 941,575 1,901,229 822,142
30.5 Growing crop nurseries

Tea Rubber Cinnamon Mixed Sugar Cane 2019/20 2018/19
crops Total Total
Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.’000 Rs.’000 Rs.’000
Cost
Balance as at 01 April 1,625 - 1,276 711 - 3,612 6,394
Additions 2,401 - - 288 - 2,689 518
Transfers - - - - - - (3,300)
Written Offs - - - (721) - (721) -
Disposals - - (1,093) (278) - (1,371) -
Balance as at 31 March 4,026 - 183 - - 4,209 3,612
203
LOLC HOLDINGS PLC
30.6 Additions to the immature plantations

These are investments in bearer biological assets carried at cost which comprises of immature/mature plantations since the
formation of the plantation companies. Further, investment in immature plantations taken over by way of leases is shown in this
note. When such plantations become mature, the additional investments need to be incurred since, taken over to bring them to
maturity will be moved from immature to mature under this note. A corresponding movement from immature to mature of the
investment undertaken by JEDB/SLSPC on the same plantation prior to the lease will also be carried out under this note.
The additions to bearer biological assets shown above includes the following costs among other costs incurred during the year in
respect of uprooting, planting and upkeeping of bearer plants.
2020 2019
As at 31 March Extent Amount Extent Amount
Ha Rs.'000 Ha Rs.'000
Uprooting
Sugarcane 782 88,716 - -
782 88,716 - -
Planting
Tea 5 1,700 2 2,310
Cinnamon 114 30,946 114 17,160
Sugarcane 3,742 937,240 - -
3,861 969,885 116 19,470
Upkeep
Tea 11 14,795 5 1,788
Rubber 56 69,279 100 16,727
Coconut 3 1,437 19 243
Cinnamon 333 92,988 183 64,246
Mixed Crop 3 1,617 15 5,481
404 180,116 322 88,486
5,046 1,238,717 438 107,955
30.7 Borrowing Costs amounting to Rs. 23.3mn (Previous Year - Rs 16.23mn) incurred on borrowings obtained to meet expenses
relating to immature plantations have been capitalised as part of the cost of immature plantations. Capitalisation of borrowing costs
will be ceased when the plantations are ready for bearing.
30.8 Given the impact of COVID-19, the Group’s bearer plants and biological assets as at 31 March 2020 was subject to impairment
testing which concluded that no material impairment was required.
204
LOLC HOLDINGS PLC
31 Subsidiary companies
31.1 Company
As at 31 March 2020 2019
No. of Shares Holding % Cost No. of Shares Holding % Cost
Rs.’000 Rs.’000
Subsidiaries
Listed subsidiaries - -
1 Brown and Company PLC 142,092,103 66.83% 7,580,999 142,092,103 66.83% 7,580,999
2 Browns Investments PLC 28,688,200 0.60% 83,426 14,344,100 0.77% 83,426
3 Commercial Leasing & Finance PLC 6,308,876,426 98.92% 10,599,809 6,308,876,426 98.92% 10,599,809
4 LOLC Development Finance PLC 132,180,572 55.55% 1,321,907 132,180,572 55.55% 1,321,907
5 LOLC Finance PLC 2,351,313,562 44.79% 10,706,462 3,919,921,531 93.33% 17,543,428
30,292,603 37,129,569
Non-listed subsidiaries
6 Browns Tours 2,030,000 100.00% 175,375 17,567,500 100.00% 175,375
7 Ceylon Graphene Technologies 36,000,000 85.00% 360,000 36,000,000 85.00% 360,000
(Private) Limited
8 Commercial Factors Limited 15,550,001 100.00% 155,500 15,550,001 100.00% 155,500
9 Eagle Recoveries (Private) Limited 25,955,088 100.00% 259,551 25,955,088 100.00% 259,551
10 East Coast Land Holding (Private) 28,700,000 100.00% 287,000 28,700,000 100.00% 287,000
Limited
11 Galoya Holdings Limited 1,300,000 50.00% 13,005 1,000,000 50.00% 13,005
12 Green Orchard Property Investments 23,795,660 100.00% 237,957 23,795,660 100.00% 237,957
(Private) Limited
13 I Pay (Private) Limited 16,000,001 100.00% 160,000 16,000,001 100.00% 160,000
14 Lanka ORIX Project Development 5,200,000 100.00% 52,000 5,200,000 100.00% 52,000
Limited
15 LOLC Advanced Technologies (Pvt) Ltd 2,000,001 100.00% 20,000 2,000,001 100.00% 20,000
16 LOLC Asia Private Limited 1,100,000 2.49% 191,297 44,100,000 100.00% 15,167
17 LOLC Asset Holdings Limited 213,048,951 100.00% 2,120,500 178,048,951 100.00% 1,770,500
18 LOLC Capital One (Pvt) Limited 15,860,000 100.00% 153,600 15,360,001 100.00% 153,600
19 LOLC Corporate Services Limited 15,400,000 100.00% 154,000 15,400,001 100.00% 154,000
20 LOLC Eco Solutions Limited 64,100,000 100.00% 641,000 64,100,000 100.00% 641,000
21 LOLC Factors Limited 370,000,001 64.91% 3,700,000 370,000,000 65.00% 3,700,000
22 LOLC Financial Sector Holdings Pvt Ltd 45,000 100.00% 1,266,001 - - -
23 LOLC International Limited 83,220,000 74.14% 12,601,467 83,220,000 74.14% 12,601,467
24 LOLC Investments Limited 1,479,920,000 100.00% 15,184,200 1,447,920,000 100.00% 15,184,200
25 LOLC Micro Investments Limited - - - 250,000,000 100.00% 2,603,000
26 LOLC Motors Limited 126,000,000 100.00% 1,260,000 126,000,000 100.00% 1,260,000
27 LOLC Myanmar Micro Finance Limited 8,119,433 35.43% 1,022,408 8,119,433 88.50% 1,022,408
28 LOLC Private Limited 150,306,584 73.38% 18,264,176 70,266,966 85.00% 7,369,088
29 LOLC Property Eight (Pvt) Ltd 29,120,001 100.00% - 1 100.00% 0
205
LOLC HOLDINGS PLC
As at 31 March 2020 2019

No. of Shares Holding % Cost No. of Shares Holding % Cost
Rs.’000 Rs.’000
30 LOLC Property Five (Pvt) Ltd 38,000,001 100.00% 380,000 38,000,001 100.00% 380,000
31 LOLC Property Four (Pvt) Ltd 26,000,001 100.00% 260,000 26,000,001 100.00% 260,000
32 LOLC Property Nine (Pvt) Ltd 1 100.00% - 1 100.00% -
33 LOLC Property One (Pvt) Ltd 29,100,001 100.00% 291,000 29,100,001 100.00% 291,000
34 LOLC Property Seven (Pvt) Ltd 3,744,001 100.00% - 1 100.00% -
35 LOLC Property Six (Pvt) Ltd 18,410,001 100.00% 184,100 18,410,001 100.00% 184,100
36 LOLC Property Ten (Pvt) Ltd 1 100.00% - 1 100.00% -
37 LOLC Property Three (Pvt) Ltd 54,600,001 100.00% 546,000 54,600,001 100.00% 546,000
38 LOLC Property Two (Pvt) Ltd 78,000,001 100.00% 780,000 78,000,001 100.00% 780,000
39 LOLC Securities Limited 40,000,000 100.00% 400,000 37,500,000 100.00% 125,000
40 LOLC Securities Limited - Preference - - - 25,000,000 100.00% 250,000
Shares
41 LOLC Technology Services Limited 23,795,660 100.00% 17,000 1,700,000 100.00% 17,000
42 Prospere Realty (Private) Limited 30,400,001 100.00% 304,000 30,400,001 100.00% 304,000
43 Sundaya Lanka (Private) Limited 624,490 51.00% 6,245 624,490 51.00% 6,245
61,447,382 51,338,163
Allowance for Impairment (Note 31.2) (796,245) (796,245)
Total 90,943,740 87,671,487
31.2 Allowance for Impairment

Company
As at 31 March 2020 2019
1. Galoya Holdings Limited 13,000 13,000

2. Lanka ORIX Project Development Limited 52,000 52,000
3. LOLC Eco Solutions Limited 25,000 25,000
4. LOLC Factors Limited 700,000 700,000
5. Sundaya Lanka (Private) Limited 6,245 6,245
31.2.1 796,245 796,245
31.2.1 Movement in allowance for impairment

Company
As at 31 March 2020 2019
Rs.'000 Rs.'000
Balance as at 01 April 796,245 796,245

Reversal for the period - -
Balance as at 31 March 796,245 796,245
206
LOLC HOLDINGS PLC
31.3 Group holdings in subsidiaries

Details of the Group’s subsidiaries at the end of the reporting period are as follows;
Proportion of ownership interest held by the Group

Subsidiary As at 31 March 2020 2019
Principal Activities No. of Control No. of Control
Shares Holding % Shares Holding %
Listed subsidiaries
1 Brown & Company PLC BCL Trading and manufacturing 177,361,879 83.42% 177,361,879 83.42%
2 Browns Investments PLC BIL Investments holding 2,118,045,811 44.22% 2,118,045,811 44.22%
3 Commercial Leasing & Finance PLC CLC Financial services 6,348,876,426 99.55% 6,348,876,426 99.55%
4 Eden Hotels Lanka PLC Eden Hotelier 93,793,173 88.82% 93,793,173 88.82%
5 LOLC Development Finance PLC LODF Financial services 237,679,520 99.89% 237,679,520 99.89%
6 LOLC Finance PLC LOFC Financial services 4,966,248,481 94.60% 3,919,921,531 93.33%
7 Palm Garden Hotels PLC Palm Investments holding 38,671,013 89.38% 38,671,013 89.38%
Non-listed subsidiaries
8 Ajax Engineers (Private) Limited Ajax Aluminium Fabrication 469,987 100.00% 469,987 100.00%
9 B G Air Services (Private) Limited BG Air Air ticketing and outbound 50,000 100.00% 50,000 100.00%
tours
10 BI Logistics and Commodities BILOGIS Pre-operational 35,500,250 100.00% 1,000,000 100.00%
(Private) Limited
11 BI Zhongtian Holdings (Pvt) Ltd Pre-operational 25,499,949 51.00% 25,499,949 51.00%
12 Browns Agri Solutions (Pvt) Ltd BFL Pre-operational 1,000,000 100% 1,0000,000 100%
13 Browns Engineering & BE&C Construction 45,000,000 50.00% 45,000,000 50.00%
Construction (Pvt) Ltd
14 Browns Global Farm (Private) BGFL Plantations 58,295,328 100.00% 58,295,328 100.00%
Limited
15 Browns Group Industries (Private) BGIL Providing marine solutions 2,800,000 100.00% 2,800,000 100.00%
Limited
16 Browns Group Motels Limited BGML Non-operational 15,862,926 99.37% 15,862,926 99.37%
17 Browns Health Care (Private) BHCL Healthcare services - - 150,000,000 100.00%
Limited
18 Browns Health Care Negambo BHNEGAMBO Non-operational 500,000 100% 500,000 100.00%
(Private) Limited
19 Browns Health Care North BHCNC Healthcare services - - 10,000,000 100.00%
Colombo (Private) Limited
20 Browns Holdings Limited BHL Investments holding 518,290,140 100.00% 518,290,140 100.00%
21 Browns Hotels and Resorts BHR Investments holding 1,191,919,624 100.00% 1,191,919,624 100.00%
Limited
22 Browns Industrial Park (Private) BIPL Renting of properties 15,405,137 100.00% 15,405,137 100.00%
Limited
23 Browns Leisure (Pvt) Ltd BLL Pre-operational 4,500,001 90.00% 10 100.00%
24 Browns Metal & Sands (Pvt) Ltd BM&SL Pre-operational 1 100.00% 1 100.00%
25 Browns Pharma (Pvt) Ltd BP Vet Pharma 10,000,000 100.00% 10,000,000 100.00%
26 Browns Pharmaceuticals Ltd BPL Pre-operational 1 100% 1 100.00%
27 Browns Power Holding Limited BPHL Investing in ventures 100,000,000 100.00% 100,000,000 100.00%
28 Browns Properties (Private) BPL Real estate business 60,000,000 100.00% 60,000,000 100.00%
Limited
207
LOLC HOLDINGS PLC

29 Browns Real Estate (Private) BREL Pre-operational 5,000,000 100.00% 5,000,000 100.00%
Limited
30 Browns Teas (Pvt) Ltd Pre-operational 1 100.00% 1 100.00%
31 Browns Thermal Engineering BTEL Importing and manufacturing 1,499,997 100.00% 1,499,997 100.00%
(Private) Limited Radiators
32 Browns Tours (Private) Limited BTL GSA for Austrian airlines and 2,030,000 100.00% 2,030,000 100.00%
inbound tour operations
33 Ceylon Graphene Technologies CGTL Graphene Manufacturing 36,000,000 85.00% 36,000,000 85.00%
(Private) Limited
34 Ceylon Roots Lanka (Pvt) Ltd CRL Inbound tour operations 1 100.00% 1 100.00%
35 CFT Engineering Limited CFT Non-operational 3,076,258 100.00% 3,076,258 100%
36 Commercial Factors (Private) Limited COMFAC Non-operational 8,000,001 100.00% 8,000,001 100.00%
37 Creations Wooden Fabricators (Private) C&C Manufacturing 18,000 90.00% 10,000 50.00%
Limited
38 Dikwella Resort (Private) Limited DRS Hotelier 481,314 100.00% 481,314 100.00%
39 Diriya Investments (Private) Limited Diriya Investments holding 383,358,564 100.00% 383,358,564 100.00%
40 Dolekanda Power (Private) Limited Dolekanda Hydro Power Generation - - 10,000,000 100.00%
41 E.S.L Trading (Private) Limited ESLT Pre-operational 1 100.00% 1 100.00%
42 Eagle Recoveries (Private) Limited ERPL Real estate 8,000,001 100.00% 8,000,001 100.00%
43 East Coast Land Holdings (Private) LLHL Real estate 21,300,000 100.00% 21,300,000 100.00%
Limited
44 Engineering Services (Private) Limited ESL Selling Generators & Related 147,501 100.00% 147,501 100.00%
Services
45 Enselwatte Power (Private) Limited Enselwatte Hydro Power Generation 10,000,000 100.00% 10,000,000 100.00%
46 Excel Global Holding Limited EGHL Investments holding 53,448,329 100.00% 53,448,329 100.00%
47 Excel Restaurant (Private) Limited ERL Operating restaurant 10,004 100.00% 10,004 100.00%
48 F L C Estates Bungalows (Private) FLC EB Leisure 1,000,000 100% 1,000,000 100.00%
Limited
49 F L P C Management (Private) Limited FLPC Plantation management 92,052,842 95.34% 92,052,842 95.34%
50 Galoya Holdings (Private) Limited GHL Managing plantations 2,600,000 100.00% 2,600,000 100.00%
51 General Accessories and Coating (Pvt) GAC Powder Coating 100,000 100.00% 100,000 100.00%
Ltd
52 Green Orchard Property Investments LPIL Real estate 16,395,660 100.00% 16,395,660 100.00%
(Private) Limited
53 Green Paradise Resorts (Private) GPR Hotelier 5,000,007 100.00% 5,000,007 100.00%
Limited
54 Grey Reach Investments Ltd (GRIL) GRIL Investments holding 20,000 66.67% - -
55 Gurind Accor (Pvt) Ltd GURIND Glass Processing 12,660,000 85.00% 12,660,000 85.00%
56 I Pay (Pvt) Ltd I Pay Technology 16,000,001 100.00% 16,000,001 100.00%
57 Klevenberg (Private) Limited KPL Trading 15,600,000 100.00% 15,600,000 100.00%
58 Lanka Orix Project Development LOPD Non-operational 5,200,000 100.00% 5,200,000 100.00%
(Private) Limited
59 LOLC Advanced Technologies (Pvt) Ltd BAT New venture 1 100.00% 1 100%
60 LOLC Africa Holdings (Pvt) Ltd - LAFRICA Investments holding 5,000,000 100.00% - -
Singapore
208
LOLC HOLDINGS PLC

61 LOLC Asset Holdings Limited LAH Investments holding 167,048,951 100.00% 167,048,951 100.00%
62 LOLC Capital One (Private) Limited LOLC Capital Pre-operational 500,001 100.00% 500,001 100.00%
63 LOLC Corporate Services (Pvt) Ltd COSER Secretarial services 8,000,001 100.00% 8,000,001 100.00%
64 LOLC Eco Solutions Limited LOLC Eco Investments holding 34,500,000 100.00% 64,100,000 100.00%
65 LOLC Factors Limited LOFAC Factoring services 370,000,001 100.00% 70,000,001 100.00%
66 LOLC Finance Zambia Limited LOLC ZAMBIA Financial Services 5,000,000 100% 1 100.00%
67 LOLC General Insurance Limited LGEN General Insurance 70,000,000 100.00% 70,000,000 100.00%
68 LOLC GEO Technologies Pvt Ltd LOLCGEO Graphene Manufacturing 900,000 90.00% - -
69 LOLC Investments Limited LOIV Investments holding 1,479,920,000 100.00% 1,148,300,000 100.00%
70 LOLC Life Assurance Limited LLIFE Life Assurance 80,000,000 100.00% 80,000,000 100.00%
71 LOLC Mauritius Holdings Limited LOLC MAURI Investments holding 5,000,000 100.00%
72 LOLC Micro Investments Limited LOMI Pre-operational - - 250,000,000 100.00%
73 LOLC Motors Limited LOMO Vehicle trading & repair 101,000,000 100.00% 101,000,000 100.00%
services
74 LOLC Property Eight (Pvt) Ltd LOLCP8 Real estate 29,120,001 100.00% 1 100.00%
75 LOLC Property Five (Pvt) Ltd LOLCP5 Real estate 38,000,001 100.00% 1 100.00%
76 LOLC Property Four (Pvt) Ltd LOLCP4 Real estate 26,000,001 100.00% 26,000,001 100.00%
77 LOLC Property Nine (Pvt) Ltd LOLCP9 Real estate 1 100.00% 1 100.00%
78 LOLC Property One (Pvt) Ltd LOLCP1 Real estate 29,100,001 100.00% 29,100,001 100.00%
79 LOLC Property Seven (Pvt) Ltd LOLCP7 Real estate 3,744,001 100.00% 1 100.00%
80 LOLC Property Six (Pvt) Ltd LOLCP6 Real estate 18,410,001 100.00% 1 100.00%
81 LOLC Property Ten (Pvt) Ltd LOLCP10 Real estate 1 100.00% 1 100.00%
82 LOLC Property Three (Pvt) Ltd LOLCP3 Real estate 54,600,001 100.00% 54,600,001 100.00%
83 LOLC Property Two (Pvt) Ltd LOLCP2 Real estate 78,000,001 100.00% 78,000,001 100.00%
84 LOLC Securities Limited
LOSEC Stock trading 35,000,000 100.00% 10,000,000 100.00%
85 LOLC Serendib (Private) Limited LOLC Serendib Pre-operational 1,000,000 100.00% - -
86 LOLC Technologies Limited LOTEC IT services 23,795,660 100.00% 16,000,001 100.00%
87 LOLC Technology Services Limited LOITS Software design 1,700,000 100.00% 1,700,000 100.00%
development and
distribution
88 Masons Mixture Limited MML Non-operational 4,289,849 99.67% 4,289,849 99.67%
89 Maturata Plantation Limited MPL Plantations 25,200,000 72.00% 25,200,000 72.00%
90 Millennium Development Limited MDL Recreational activities 44,390,823 100.00% 44,390,823 100.00%
91 Prospere Realty (Private) Limited LRL Real estate 23,000,001 100.00% 23,000,001 100.00%
92 Riverina Resort (Private) Limited RRL Leisure 35,050,000 100.00% 35,050,000 100.00%
93 S.F.L. Services (Private) Limited SFL Lending to related 986,591 100.00% 986,591 100.00%
companies
94 Saga Solar Power (Private) Limited SSP Solar power generation 38,703,370 50.10% 38,703,370 50.10%
95 Sifang Lanka (Private) Limited Sifang Importing ,Assembling & 2,050,000 100.00% 2,050,000 100.00%
Selling of agro equipment's
96 Sifang Lanka Trading (Private) Limited SFTL Non-operational 3,000,002 100.00% 3,000,002 100.00%
97 Snowcem Products Lanka (Private) SPLL Non-operational 400,000 100.00% 400,000 100.00%
Limited
98 Speed Italia Limited SIL Non-operational 100,000 100.00% 100,000 100.00%
209
LOLC HOLDINGS PLC

99 Sumudra Beach Resorts (Private) Sumudra Hotelier - pre-operational 33,127,500 100.00% 33,127,500 100.00%
Limited
100 Sun & Fun Resorts (Private) Limited Sun & Fun Hotelier 16,287,848 51.00% 16,287,848 51.00%
101 Sunbird Bioenergy (SL) Ltd SBSL 2,816 75.09% - -
102 Sundaya Lanka (Private) Limited Sundaya Non-operational 624,490 51.00% 624,490 51.00%
103 Tea Leaf Resort (Private) Limited TLRL Leisure 250,000 50.00% 250,000 50.00%
104 The Hatton Transport & Agency HTAC Non-operational 1,000 100.00% 1,000 100.00%
Company (Private) Limited
105 Thurushakthi (Private) Limited Non-operational 8,000,001 100.00% 8,000,001 100.00%
106 Tropical Villas (Private) Limited TVL Non-operational 14,959,232 100.00% 10,344,300 100.00%
107 United Dendro Energy Ambalantota UDEA Non-operational 8,000,001 100.00% 8,000,001 100.00%
(Private) Limited
108 United Dendro Energy Walawewatte UDEW Non-operational 8,000,001 100.00% 8,000,001 100.00%
(Private) Limited
109 Walker & Greig (Private) Limited WGL Non-operational 1 100.00% 1 100.00%
Foreign subsidiaries using different

functional currencies
110 Bodufaru Beach Resorts (Private) BBR Hotelier - pre-operational 235,800 99.96% 235,800 99.96%
Limited
111 B Commodities ME(FZE) BCOM Wealth Management 150,000 100.00% 150,000 100.00%
112 Browns Ari Resort (Pvt) Ltd BARM Hotelier - pre-operational 40,099 100.00% 40,099 100.00%
113 Browns Kaafu N Resort (Pvt) Ltd BKNRM Hotelier - pre-operational 99 99.00% 99 99.00%
114 Browns Machinery (Cambodia) Co., Ltd BMC Trading 5,000 100.00% 5,000 100.00%
115 Browns Raa Resort (Pvt) Ltd BRRM Hotelier - pre-operational 99 99.00% 99 99.00%
115 LOLC Asia (Pvt) Ltd LOLC ASIA Investment Holdings 44,100,000 100.00% 33,600,000 100.00%
116 LOLC (Pvt) Ltd LOPL Investment Holdings 70,266,966 74.76% 70,266,966 100.00%
117 LOLC Cambodia Plc TPC Financial services 2,175,792 96.97% 695,122 96.97%
118 LOLC Financial Sector Holdings Private LOLCFSH Investment Holdings 45,000 100.00% 45,000 100.00%
Limited
119 LOLC International (Pvt) Ltd LOIL Investment Holdings 112,253,842 100.00% 112,253,842 100.00%
120 LOLC MEKONG Holdings Private LOLCMEKONG Investment Holdings 15,000 100.00% 15,000 100.00%
Limited
121 LOLC Myanmar Micro-Finance LMML Financial services 22,914,505 100.00% 9,174,964 100.00%
Company Limited
122 NPH Investment (Private) Limited NPH Leisure 141,555,600 51.00% 141,555,600 51.00%
123 Pak Oman Micro finance Bank Limited Pak Oman Financial services 115,648,000 50.10% 115,648,000 50.10%
124 PRASAC Micro Finance Institution PRASAC Financial services 77,000,000 70.00% 77,000,000 70.00%
Limited
125 PT LOLC Management Indonesia PTLMI Investment Holdings 39,438 60.00% 15,960 60.00%
126 PT Sarana Sumut Ventura PTSSV Financial services 38,229,021 84.20% 5,292 76.46%
210
LOLC HOLDINGS PLC
31.4 Fair values of subsidiaries

The Directors’ valuation of investments in subsidiaries has been done on consolidated net assets basis. The following subsidiaries
are listed in the Colombo Stock Exchange and their market value details given below;
Group
2020 2019
No. of Market value No. of Market value
Share Rs. 000 Share Rs. 000
Brown & Company PLC 177,361,879 7,449,199 177,361,879 8,513,370

Browns Investments PLC 2,118,045,811 4,024,287 2,118,045,811 3,177,069
Commercial Leasing & Finance PLC 6,348,876,426 11,427,978 6,348,876,426 16,507,079
Eden Hotels Lanka PLC 93,793,173 1,444,415 93,793,173 1,266,208
LOLC Development Finance PLC 237,679,520 8,152,408 237,679,520 9,269,501
LOLC Finance PLC 4,966,248,481 10,925,747 3,919,921,531 12,151,757
Palm Garden Hotels PLC 38,671,013 696,078 38,671,013 715,414
44,120,111 51,600,397

Colombo Stock Exchange for trading indicated an inactive stock market as at 31 March 2020. (last date of trading as the CSE’s
Trading Floor was closed from 23/03/2020 to 31/03/2020 and accordingly management obtain the closing price published by CSE
as of 31 March 2020 for the above valuation.
31.5 Nature of the relationship between the parent and subsidiaries when the parent does not own, more than half of the
voting power
31.5.1 Browns Investments PLC
LOLC directly and through its subsidiaries, including Brown & Company PLC and LOLC Investments Ltd, holds a total of 44.22% in
Browns Investments PLC (BIL). Though the percentage held directly and indirectly by LOLC is less than 50%. BIL is considered as
a subsidiary as a result of an agreement between Mr. Ishara Nanayakkara (Executive Deputy Chairman of the Group) and his fully
owned subsidiaries call Oxford Capital (Private) Limited and Churchill Capital (Private) Limited which collectively hold 15.42% of BIL.
With the above agreement group holds 59.64% of the governing rights of BIL. Accordingly, Group considers BIL as a subsidiary by
virtue of de facto control though the Group owns less than half of the BIL (44.22%) and has less than half of the voting power. It is
able to govern the financial and operating policies of BIL and on the basis that the remaining voting rights in the investee are widely
dispersed and that there is no indication that all other shareholders exercising their votes collectively. Consequently, the Group
concludes BIL as a subsidiary and consolidates.
31.6 Acquisition of a subsidiary

31.6.1 Financial Year 2020
31.6.1.1 Sunbird Bioenergy (SL) Ltd (SBSLL)
On 14 May, 2019, B Commodities ME (FZE), a fellow subsidiary of the Group incorporated in Sharjah, UAE has acquired 66.67%
equity stake with controlling interest in Grey Reach Investment Limited (GRIL) for a consideration of USD 30Mn.
Pursuant to an Investment Agreement entered into on the 29 of April 2019, B Commodities ME (FZE) has acquired a 66.67%
stake in GRIL which is the holding Company of Sunbird Bioenergy (SL) Limited (SBSL) incorporated in Sierra Leone. GRIL is an
investment holding, and its only asset is its 75.1% investment in SBSLL.
211
LOLC HOLDINGS PLC
SBSL holds 23,500 Hectares of land for sugarcane plantation and a factory with a production capacity of 85 million litters of bio
fuel per annum. The company also operates a renewable energy power plant which has a capacity of producing 32 MW of power.
The above factory and renewable energy power plant together with its plantation and the mechanised irrigation system is one of
the largest agricultural projects in the African continent.
Sunbird Bioenergy (SL) Limited is also one of the largest economic opportunity providers in the African region with over 5,000
employees.
LOLC GEO Technologies (Pvt) Ltd

On 31 May, 2020, LOLC Holdings PLC a holding entity of the Group has acquired 90% per cent equity stake with controlling
interest in LOLC GEO Technologies (Pvt) Ltd for a consideration of Rs. 101.6Mn.
Company is predominantly engaged in exploration and development of Graphite Mines, Installation of Graphite refiner and
Extracting Graphite oil based dry lubricants, Graphite processing for the production of various related product such as Graphite
Mesh, Gaphite Powder for Exports and Local sales.
31.6.1.2 Consideration paid

For the year ended 31 March 2020 Control Cash and cash Acquisition Fair value Fair value of Total
holding equivalents related costs of the previously consideration
acquired paid consideration held interest of acquisition
paid
% Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.’000
Grey Reach Investments Ltd (GRIL) 66.67% 5,299,803 - 5,299,803 - 5,299,803

LOLC GEO Technologies Pvt Ltd 90.00% 101,612 - 101,612 - 101,612
31.6.1.3 The fair values of the identifiable assets and liabilities of the acquire as at the date of acquisition were;
For the year ended 31 March 2020 GRIL SBSL LOLC GEO Total
Note Rs.'000 Rs.'000 Rs.'000 Rs.’000
Assets
Cash in hand and favourable bank balances 8,185 771,479 101,702 881,366
Inventories - 1,633,410 - 1,633,410
Trade and other current assets - 1,618,420 3,615 1,622,035
Right-of-use assets 27 - 429,807 - 429,807
Bearer biological assets 30.4 - 693,179 - 693,179
Property, plant and equipment 35 - 37,426,194 - 37,426,194
Total assets 8,185 42,572,489 105,317 42,685,992
Liabilities
Interest bearing borrowings 38.3 - 2,249,653 - 2,249,653
Current tax payables 40.1 - 59,324 - 59,324
Trade and other payables 163,353 1,640,553 102 1,804,008
Retirement benefit obligations 43 - 6,263 - 6,263
Total liabilities 163,353 3,955,793 102 4,119,248
Fair value of net assets acquired (155,168) 38,616,697 105,215 38,566,744
212
LOLC HOLDINGS PLC
31.6.1.4 Goodwill on acquisition / (Gain on bargain purchase)

Goodwill on acquisition / (Gain on bargain purchase) is recognised as a result of the acquisitions as follows
For the year ended 31 March 2020 GRIL Group LOLC GEO
Note Rs.'000 Rs.’000
Fair value of the consideration paid 31.6.1.2 5,299,803 101,612

Net Non-controlling interests, based on their proportionate interest in the recognised 27,766,357 10,521
amounts of the assets and liabilities
33,066,160 112,133
Fair value of identifiable net assets 31.6.1.3 38,461,529 105,215
Goodwill on acquisition / (Gain on bargain purchase) (5,395,369) 6,919
31.6.1.5 Net cash used in acquisition

For the year ended 31 March 2020 GRIL LOLC GEO Total
Note Rs.'000 Rs.'000 Rs.’000
Purchase consideration paid

Fair value of the consideration paid 31.6.1.2 5,299,803 101,612 5,401,415
5,299,803 101,612 5,401,415
Cash & cash equivalents acquired
Positive cash balances 31.6.1.3 881,366 - 881,366
Net cash used in acquisition (4,418,437) (101,612) (4,520,049)

31.6.2.1 Gurind Accor (Pvt) Ltd (GURIND)
GURIND is one of the leading Glass Processing Enterprise in Sri Lanka. Its footprint stretches over a wide range of Architectural,
Industrial Glass, Mirror Products & Aluminium Composite Panels. Established in 1986, the company has an illustrious history.
On 17 December, 2018 Group has acquired the 85% stake of Gurind Acor (Pvt) Ltd through, Ajax Engineering (Pvt) Ltd and
Browns Engineering & Constructions (Pvt) Ltd.
31.6.2.2 Consideration paid

For the year ended 31 March 2019 Control holding Cash and cash Acquisition Fair value Fair value of Total
acquired equivalents related costs of the previously consideration
paid Note31.6.2.5.1 consideration held interest of acquisition
paid
% Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.’000
Gurind Accor (Pvt) Ltd (GURIND) 85.00% 53,805 - 53,805 - 53,805

53,805 - 53,805 - 53,805
213
LOLC HOLDINGS PLC
31.6.2.3 The fair values of the identifiable assets and liabilities of the acquire as at the date of acquisition were;
GURIND
Note Rs.'000
Assets
Inventories 40,474
Trade and other receivables 72,733
Property, plant and equipment 35 52,092
Total assets 165,299
Liabilities
Bank overdraft 16,854
Interest bearing borrowings 38.3 264
Trade and other payables 110,400
Retirement benefit obligations 43 4,752
Total liabilities 132,270
Fair value of net assets acquired 33,029
31.6.2.4 Goodwill on acquisition / (Gain on bargain purchase)

Goodwill on acquisition / (Gain on bargain purchase) is recognised as a result of the acquisitions as follows;
For the year ended 31 March 2019 GURIND
Note Rs.'000
Fair value of the consideration paid 31.6.2.2 53,805

Net Non-controlling interests, based on their proportionate interest in the recognised amounts of the (13,799)
assets and liabilities
40,006
Fair value of identifiable net assets 31.6.2.3 33,029
Goodwill on acquisition / (Gain on bargain purchase) 6,977
31.6.2.5 Net cash used in acquisition
For the year ended 31 March 2019 GURIND

Note Rs.'000
Purchase consideration paid 31.6.2.2

Fair value of the consideration paid 53,805
Acquisition related costs -
53,805
Cash & cash equivalents acquired 31.6.2.3
Positive cash balances (16,854)
Net cash used in acquisition 70,659
214
LOLC HOLDINGS PLC
31.7 Disposal of Subsidiaries

31.7.1 Browns Health Care
On 20 February 2020, the LOLC Group has disposed of 100% control holding of both Browns Health Care (Pvt) Ltd and Browns
Health Care North Colombo (Pvt) Ltd. The results of the disposal are as follows;
31.7.1.1 Consideration received

During the current financial year group has divested following subsidiaries;
For the year ended 31 March 2020 Controlling Cash and cash Other Fair value Fair value of Total
interest sold equivalents monetary of the previously consideration
paid assets consideration held of disposal
received interest
% Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.’000
Browns Health Care 100.00% 1,600,000 352,260 1,952,260 - 1,952,260

Fair value of the consideration 1,600,000 352,260 1,952,260 - 1,952,260
received
31.7.1.2 Fair values of the identifiable assets and liabilities of the disposed;
Fair values of the identifiable assets and liabilities of the disposed groups at the date of disposal were;
For the year ended 31 March 2020 BHCL BHCNCL Total
Rs.’000 Rs.'000 Rs.'000
Assets
Cash in hand and favourable bank balances 10,520 135 10,655
Inventories 47,845 - 47,845
Current tax assets 28,842 10 28,852
Trade and other current assets 200,928 186 201,114
Right-of-use assets 27 1,132 - 1,132
Intangible assets 34.5 359 - 359
Property, plant and equipment 35 1,174,017 255,586 1,429,603
Total assets 1,463,643 255,917 1,719,560
Liabilities
Bank overdrafts 8,093 - 8,093
Financial Liabilities at Amortised Cost/ Interest bearing borrowings 38.4 1,327 - 1,327
Current tax payables 40.1 8,276 29,064 37,340
Trade and other payables 171,277 146,664 317,941
Retirement benefit obligations 43 11,847 - 11,847
Total liabilities 200,820 175,728 376,548
Net assets disposed 1,262,823 80,189 1,343,012
215
LOLC HOLDINGS PLC
31.7.1.3 Gain on disposal of subsidiaries

Total
Note Rs.'000
Total consideration received 31.7.1.1 1,952,260

De-recognition of non-controlling interests (101,330)
Fair value of net assets disposed 31.7.1.2 (1,343,012)
Gain on disposal 507,918
31.7.1.4 Net cash received from divestment

Total
Note Rs.'000
Purchase consideration received 31.7.1.1 1,952,260

Other monetary assets (352,260)
Cash & cash equivalents acquired 31.7.1.2
Positive cash balances (10,655)
Bank overdrafts 8,093
Net cash received from divestment 1,597,438
31.8 Acquisition of non-controlling interests

During the financial year, Group acquired non-controlling interests from the following subsidiaries.
Subsidiary % of NCI Consideration Non- Results on

acquired paid controlling acquisitions
interest
acquired
Rs.’000 Rs.'000 Rs.'000 Rs.’000
Creations Wooden Fabricators (Private) Limited 40.00% 3,500 (327) 3,173

PT Sarana Sumut Ventura 7.74% 100,049 (71,303) 28,746
103,549 (71,630) 31,919
The results of non-controlling interests acquisitions (difference of net assets acquired over the consideration) were directly charged
to equity under shareholder transactions.
31.9 NCI contribution to subsidiary share issues

NCI
contribution
Rs.'000
Browns Leisure (Pvt) Ltd 5,000

LOLC (Pvt) Ltd 2,457,576
LOLC Cambodia Plc 111,484
LOLC Finance PLC 191
PT LOLC Management Indonesia 40,000
2,614,250
216
LOLC HOLDINGS PLC
31.10 Amalgamation of LOLC Micro Investments Limited with LOLC Holdings PLC
In compliance to the Section 242 of Companies Act No. 07 of 2007, LOLC Micro Investments Limited (LMIL) which was a fully
owned subsidiary of the LOLC Holding PLC (holding company of the group) was amalgamated with LOLC Holdings PLC with effect
from 30 June, 2019.
The carrying amounts of the identifiable assets and liabilities of the acquiree as at 30 June, 2019. is as follows;
NCI
contribution
Rs.'000
Assets
Cash and cash equivalents 146
Investment securities 176,130
Current tax assets 7
Trade and other current assets 179,158
Investments in group companies;
Subsidiary companies 10,895,087
11,250,528
Liabilities
Trade and other payables 73
73
Carrying amount of identifiable net assets acquired 11,250,455
Results of the acquisitions of above entity are as follows;

Investment 2,603,000
Carrying amount of identifiable net assets merged 11,250,455
Resulting Loss 8,647,455
Since this business combination is within entities under the common control of the ultimate parent LOLC, no goodwill is recognised
and upon the merger, the gain of Rs. 8,647Mn was recognised in equity of the Company.
217
LOLC HOLDINGS PLC
31.10 Non-controlling interests

The following table summarises the information relating to each of the Group’s subsidiaries that has material NCI, before any intra-
group eliminations.
Financial Services Leisure & Entertainment
As at 31 March 2020 LOFC PAKOMAN LOCAM PRASAC PALM EDEN

NCI % 5.40% 49.90% 3.03% 30.00% 10.62% 11.18%
Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000
Total Assets 191,810,082 5,064,211 195,027,927 615,839,898 5,394,761 9,725,316

Total liabilities 160,520,429 2,399,062 167,167,947 533,935,315 2,272,515 8,684,135
Net assets 31,289,653 2,665,149 27,859,980 81,904,583 3,122,246 1,041,181
Gross Carrying amount of NCI 5,761,857 1,678,652 7,900,577 52,119,762 2,041,327 702,773
Gross income 43,001,537 1,148,780 26,430,982 72,928,141 289,744 672,883

Profit/ (Loss) for the period 3,779,684 (54,214) 6,392,946 19,042,077 (17,408) (1,116,270)
OCI for the period (211,268) - - - 54,171 50,139
Profits/ (Loss) allocated to NCI 696,013 (34,147) 1,812,922 12,117,375 (11,382) (753,456)
OCI allocated to NCI (38,904) - - - 35,417 33,843
Financial Services Leisure & Entertainment
As at 31 March 2019 LOFC PAKOMAN LOCAM PRASAC PALM EDEN

NCI % 6.67% 49.90% 18.55% 30.00% 10.62% 11.18%
Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000
Total Assets 211,031,713 3,163,052 120,917,785 455,335,891 5,052,516 9,699,198

Total liabilities 188,265,124 176,197 104,003,437 397,641,387 1,967,033 7,591,886
Net assets 22,766,589 2,986,855 16,914,348 57,694,504 3,085,483 2,107,312
Carrying amount of NCI 1,518,198 1,490,413 3,137,068 17,308,351 327,752 235,612
Gross income 46,159,553 760,273 16,952,784 53,706,685 1,217 893,645

Profit/ (Loss) for the period 5,962,868 80,246 3,842,560 13,743,881 (270,919) 869,459
OCI for the period (50,266) (224,809) 1,526,540 5,564,316 12,731 11,380
Profits/ (Loss) allocated to NCI 397,636 40,042 712,671 4,123,164 (28,778) 97,212
OCI allocated to NCI (3,352) (112,178) 283,124 1,669,295 1,352 1,272
218
LOLC HOLDINGS PLC
Manufacturing Investment Holdings Plantation & Power

& Trading Generation
NPHI GPR MDL BCL LOLCIPL BIPLC MPL SBSLL Total
49.00% 67.50% 61.27% 16.58% 6.76% 55.78% 28.00% 24.91%
Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000
9,725,532 1,369,788 5,912,508 45,629,754 40,614,767 32,041,171 6,354,745 44,584,630 1,209,095,089

6,429,333 208,589 995,042 17,636,874 10,677,709 15,364,934 6,150,455 6,297,566 938,739,905
3,296,199 1,161,199 4,917,465 27,992,881 29,937,058 16,676,237 204,290 38,287,063 270,355,184
2,645,047 783,781 3,012,713 4,655,777 2,022,465 10,216,791 149,972 30,862,697 124,554,190
29 151,317 23,608 14,394,166 - 2,155,000 1,853,731 109,871 163,159,789

(15,295) (67,187) (138,671) 1,009,639 (1,096,092) 115,492 (944,111) (2,223,667) 24,666,922
- (50) 228 (10,335) - 362,400 (50,333) 1,894,033 2,088,987
(12,274) (45,350) (84,958) 167,923 (74,049) 70,757 (693,081) (1,792,468) 11,363,825

- (34) 140 (1,719) - 222,027 (36,950) 1,526,755 1,740,575
Manufacturing Investment Holdings Plantation & Power

& Trading Generation
NPHI GPR MDL BCL LOLCIPL BIPLC MPL SAGA Total
49.00% 67.50% 61.27% 16.58% 44.29% 55.78% 28.00% 49.90%
Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000
7,654,400 1,429,486 5,382,957 44,910,263 46,616,305 23,338,398 6,713,327 2,569,359 943,814,650

4,550,361 201,050 327,049 17,921,208 8,896,476 7,140,053 5,481,875 1,686,991 745,850,127
3,104,039 1,228,436 5,055,908 26,989,055 37,719,829 16,198,345 1,231,452 882,367 197,964,522
1,520,973 829,165 3,097,531 4,476,042 16,704,496 9,035,608 344,807 440,301 60,466,315
38 224,562 52,863 16,213,662 - 958,743 2,406,621 440,334 138,770,980

(12,161) (20,421) (89,300) 1,829,032 (912,061) (318,642) (28,455) 39,986 24,716,073
341,480 (621) - 929,353 (948,368) (54,566) (51,196) - 7,055,974
(5,959) (13,783) (54,710) 303,339 (403,913) (177,742) (7,967) 19,953 5,001,164

167,325 (419) - 154,130 (419,992) (30,438) (14,335) - 1,695,786
219
LOLC HOLDINGS PLC
32 Equity accounted investees

32.1 Company
As at 31 March 2020 2019
No. of Shares Cost No. of Share Cost
Rs. 000 Rs. 000
Agstar PLC 60,213,500 390,184 60,213,500 390,184

Galoya Plantations (Private) Limited 27,267,058 348,702 27,267,058 348,702
Seylan Bank PLC 111,968,572 3,488,227 79,955,301 2,775,115
Sierra Construction (Private) Limited - - 12,488,250 600,000
Sierra Holding (Private) Limited - - 4,494,492 200,000
4,227,113 4,314,001
32.2 Group holdings in equity accounted investees

Details of the Group’s equity accounted investees at the end of the reporting period are as follows;

As at 31 March 2020 2019
Investee Investor Company No. of Share Holding % No. of Share Holding %
1. Associated Battery Manufacturers SFL 2,439,355 38.50% 2,439,355 38.50%

(Ceylon) Limited (ABM)
2. Agstar PLC (AFPLC) - Group LOLC 60,213,500 18.53% 60,213,500 18.53%

BIL 40,520,061 12.47% 40,520,061 12.47%
Total AFPLC 100,733,561 30.99% 100,733,561 30.99%
3. BPPL Holdings PLC LOIV 80,546,372 26.25% 80,546,372 26.25%
4. Commercial Insurance Brokers CLC 240,000 40.00% 240,000 40.00%

(Private) Limited (CIB)
5. Galoya Plantations Limited (GPL) LOLC 27,267,058 26.95% 27,267,058 26.95%

BCL 22,309,413 22.05% 22,309,413 22.05%
Total GPL 49,576,471 49.00% 49,576,471 49.00%
220
LOLC HOLDINGS PLC

As at 31 March 2020 2019
Investee Investor Company No. of Share Holding % No. of Share Holding %
6. Seylan Bank PLC - Group LOLC (NV) 111,968,446 44.41% 83,080,731 43.93%
LOLC (V) 126 - 94 -
V - Voting shares LOIV (V) 24,019,937 9.55% 18,014,953 9.55%
NV - Non-voting shares BCL (V) 34,892,389 13.87% 26,169,292 13.87%
CLC (NV) 110,806 0.04% 83,104 0.04%
LOITS (NV) 2,201,808 0.87% 1,646,856 0.87%
Total - V 58,912,452 23.43% 44,184,339 23.43%
Total - NV 114,281,060 45.32% 84,810,692 44.85%
7. Sierra Construction (Private) Limited LOLC - - 99,906,000 10.00%

(SCPL) - Group
BIL 199,812,000 19.99% 99,906,000 9.99%
Total SCPL 199,812,000 19.99% 199,812,000 20.00%
8. Sierra Holdings Limited (SHL) - LOLC - - 4,494,492 10.00%

Group
BIL 8,988,984 19.98% 4,494,492 9.99%
Total SHL 8,988,984 19.98% 8,988,984 20.00%
9. Taprobane Plantation Limited (TPL) BIL 22,500 44.94% 22,500 44.94%
10. Virginia International Limited (VIL) BIL 800,000 40.00% 800,000 40.00%
11. NPH Development (Pvt) Ltd NPHI 161,999 50.00% 161,999 50.00%
12. Patronus Wealth Holdings Limited LOPL 2,000,000 20.00% 2,000,000 20.00%
221
LOLC HOLDINGS PLC
32.3 The summarised financial information of equity accounted investees for the year ended 31 March 2020 not adjusted
for the percentage of ownership held by the Group;
As at 31 March 2020 For the year ended 31 March 2020
Component Principal Activities Total Total Equity Income Expenses Profit Other
Assets Liabilities or loss comprehensive
income
ABM Battery manufacturing 2,532,294 2,075,683 456,611 3,733,333 (4,361,553) (628,220) -

AFPLC Fertiliser manufacturing 5,909,354 2,884,696 3,024,658 1,766,836 (1,628,847) 137,989 65,720
Beira Brush manufacturing 5,032,478 2,157,202 2,875,276 2,902,882 (2,497,327) 405,555 -
CIB Insurance broking 343,002 74,938 268,064 274,462 (236,650) 37,812 70
GPL Sugar plantations 3,844,074 11,365,618 (7,521,543) 3,790,122 (5,220,262) (1,430,140) 143,574
SBPLC Banking 521,023,046 472,198,794 48,824,252 25,114,472 (21,233,446) 3,881,026 1,855,593
SCPL Construction 23,370,822 20,678,419 2,692,403 16,041,503 (17,118,247) (1,076,744) 105,811
SHL Investing 39,560,441 30,299,829 9,260,612 23,691,433 (23,519,908) 171,525 271,564
TPL Entertainment operations 266,998 377,304 (110,306) 64,870 (121,676) (56,806) -
VIL Non-operational 17,767 190 17,577 237 (164) 73 -
NPHD Mix development 1,494,832 1,191,005 303,827 - (48,655) (48,655) 6,972
PATRONUS Wealth Management 1,229,573 658,830 570,743 119,456 (530,046) (410,590) -
604,624,683 543,962,510 60,662,174 77,499,607 (76,516,782) 982,825 2,449,305
32.4 Fair values of equity accounted investees

The Directors’ valuation of investments in equity accounted investees has been done on net assets basis. The following associates
are listed in the Colombo Stock Exchange and their market value details given below;
Group
As at 31 March 2020 2019
No. of Shares Market value No. of Shares Market value
Rs. 000 Rs. 000
Agstar PLC 100,733,561 312,274 100,733,561 503,668

Seylan Bank PLC - voting shares 58,912,452 1,973,567 44,184,339 2,774,776
Seylan Bank PLC - non-voting shares 114,281,060 2,525,611 84,810,692 3,044,704
BPPL Holdings PLC 80,546,372 612,152 80,546,372 797,409
5,423,605 7,120,557

Colombo Stock Exchange for trading indicated an inactive stock market as at 31 March 2020. (last date of trading as the CSE’s
Trading Floor was closed from 23/03/2020 to 31/03/2020 and accordingly management obtain the closing price published by CSE
as of 31 March 2020 for the above valuation.
222
LOLC HOLDINGS PLC
32.5 Gain on Bargaining Purchase of equity accounted investees

Seylan Bank PLC
LOLC group has increase it’s ownership stake in Seylan Bank PLC (SEYB) which accounted as equity accounted investees
(associate) in the LOLC group financials till 31 March 2020 using equity accounting under LKAS 27. Group increase it’s ownership
in SEYB by 0.24%.
The results of the disposal shown below;
For the year ended 31 March 2020 Group

Rs.’000
Investment made 34,765

Net assets acquired 110,522
Goodwill on acquisition / (Gain on bargain purchase) (75,758)
The gain on acquisition of SEYB recognised in the profit or loss under “Results on acquisition and divestment of Group
investments.
223
LOLC HOLDINGS PLC
32.6 Equity value of investment in equity accounted investees to the Group

For the year ended 31 Share of OCI
March 2020
As at Acquisitions / Other equity Share of profit / never be to be classified
01 April (disposals) movements (loss) reclassified to to P/L
2019 net of tax profit or loss
Equity accounted investee Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
1 ABM 417,058 - - (241,865) - -

2 AFPLC 1,190,333 - - 42,763 20,367 -
3 Beira 568,130 - - 112,627 - -
4 CIB 98,040 - - 15,125 28 -
5 GPL - - - - - -
6 SBPLC 13,149,903 1,433,297 - 1,310,759 146,745 489,352
7 SCPL 1,281,202 - - (207,307) 55,634 (826)
8 SHL 963,048 - - 94,314 22,190 (642)
9 VIL 4,137 - - - - -
10 NPHD 158,160 - - (24,328) - 14,154
11 PATRONUS 211,577 - - (82,118) - -
12 Venture Capital 4,246 - - - - -
18,045,834 1,433,297 - 1,019,970 244,964 502,038
For the year ended 31 Share of OCI

March 2019
As at Acquisitions / Other equity Share of profit / never be to be classified
01 April (disposals) movements (loss) reclassified to to P/L
2018 net of tax profit or loss
Equity accounted investee Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
1 ABM 366,625 - - 67,508 - -

2 AFPLC 1,164,144 - (7,786) 74,631 (30,584) -
3 Beira 525,212 - - 109,792 38,609 (14,899)
4 CIB 90,961 - - 13,210 (131) -
5 GPL - - - - - -
6 SBPLC 12,685,225 - - 1,007,219 53,039 92,376
7 SCPL 1,346,434 - - (68,020) (11,447) 2,372
8 SHL 991,425 - - (24,770) (21,591) 2,995
9 VIL 4,137 - - - - -
10 NPHD 991 167,426 - (10,294) - 37
11 PATRONUS 271,992 - - (60,415) - -
12 Venture Capital 4,246 - - - - -
17,451,392 167,426 (7,786) 1,108,860 27,895 82,881
224
LOLC HOLDINGS PLC
Dividend Foreign Gain on As at

received currency bargain 31 March
translations purchase 2020
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
- - - 175,193
(20,144) - - 1,233,319
(33,829) - - 646,928
(8,400) - - 104,793
- - - -
- - 75,758 16,605,814
- (522) - 1,128,181
- (406) - 1,078,504
- - - 4,137
- 3,486 - 151,472
- - - 129,459
- - - 4,246
(62,373) 2,558 75,758 21,262,046
Dividend Foreign Impact due to As at

received currency IFRS 09 & 15 31 March
translations 2019
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
(17,076) - - 417,058
(10,072) - - 1,190,333
(33,827) (56,757) - 568,130
(6,000) - - 98,040
- - - -
(97,518) - (590,437) 13,149,903
- 11,864 - 1,281,202
- 14,989 - 963,048
- - - 4,137
- - - 158,160
- - - 211,577
- - - 4,246
(164,493) (29,903) (590,437) 18,045,834
225
LOLC HOLDINGS PLC
33 Deferred tax assets and liabilities

33.1 Recognised deferred tax assets
Deferred tax assets are attributable to the origination of following temporary differences:
Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Accelerated depreciation for tax purposes – Own assets (53,090) (191,625) - -

Accelerated depreciation for tax purposes – Leased assets 73,789 - - -
Investment Properties (39,656) - - -
Lease Receivables (205,307) 4,579,824 - -
Unutilised Tax Losses 2,799,391 3,417,064 - -
Provision for inventories 3,647 - - -
Employee benefits 1,357,598 1,563,503 - -
General Provisions 668,729 4,291,980 - -
Operating lease assets unamortised VAT - - - -
Provision for loan loss impairment 114,817 - - -
Unrealised loss on exchange 28,687 134,488 - -
Hedging reserve - - - 275
Others (16,350) (64,221) - -
Net deductible temporary difference 4,732,255 13,731,012 - 275
Total recognised deferred tax assets 1,259,639 2,123,566 - 275
33.2 Movement in recognised deferred tax assets

Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Balance as at 01 April 2,123,566 1,914,813 275 -

Originations / Reversal to the Income Statement from 419,499 (18,984) - -
Originations / Reversal to the Income Statement from - 453,069 - -
Amount originating/(reversing) to retained earnings 13,533 (346,027)
(Deferred tax on SLFRS 9/15 and 16 Transitional
adjustments)
Directly charged to the equity 33.7 5,178 3,153 - -
Effect of amalgamation - - - 275
Other adjustments / transfers 214,082 (63,350) -
Exchange translation difference 175,357 180,892 (275) -
Reclassified to discontinuing operations (1,691,576) - - -
Balance as at 31 March 1,259,639 2,123,566 - 275
226
LOLC HOLDINGS PLC
33.3 Recognised deferred tax liabilities

Deferred tax liabilities are attributable to the origination of following temporary differences:
Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Accelerated depreciation for tax purposes – Own assets 5,429,866 8,091,796 632,533 615,403
Accelerated depreciation for tax purposes – Leased assets 406,840 11,459 10,446 11,459
Revaluation surplus on freehold buildings 1,915,163 1,505,290 - -
Revaluation surplus on freehold land 2,928,167 2,746,159 - -
Investment properties 3,642,289 1,194,998 99,843 25,716
Lease receivables 6,357,996 3,013,750 (55,063) (740)
Unutilised tax losses (1,409,576) (2,633,075) - -
Provision for inventories (654,093) (282,552) - -
Employee benefits (986,547) (543,901) (320,391) (347,415)
General provisions (1,326,109) (624,255) - -
Forward exchange contracts assets 62,811 (37,910) - -
Consumable biological assets 3,643,065 3,788,607 - -
Bearer biological assets 1,176,624 1,192,214 - -
Unrealised loss on exchange - 48,037 - -
Hedging reserve 358,137 - -
Other movements 1,497,233 2,449,720 - -
Net taxable temporary difference 23,023,866 19,920,336 367,368 304,423
Total recognised deferred tax liabilities 5,010,253 5,296,333 384,999 367,318
33.4 Movement in recognised deferred tax liabilities

Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000

Originations / Reversal to the Income Statement from (281,028) 130,995 (622) 48,812
Amount originating/(reversing) to retained earnings - (291,836) - -
(Deferred tax on SLFRS 9/15 and 16 Transitional
adjustments)
Directly charged to the equity (4,336) 471,888 18,578 1,286
Recognition of Previously Unrecognised Deferred Tax - - - -
Impact due to rate change - - - -
Other adjustments / transfers (1,514) 48,489 (275) (5,926)
Exchange translation difference 798 1,767 - -
227
LOLC HOLDINGS PLC
33.5 Deferred tax expense

Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Deferred tax assets

Originations / reversal during the period 33.2 (419,499) 18,984 - -
Deferred tax liabilities
Originations / reversal during the period 33.4 (281,028) 130,995 (622) (38,248)
Impact due to rate change - - (275) (10,564)
(700,527) 149,979 (897) (48,813)
33.6 Unrecognised deferred tax assets for deferred taxation

Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be
available in respective group companies against which the Group can utilise the benefits there from.
Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Unutilised tax losses 25,242,527 15,440,408 10,002,020 3,438,163

25,242,527 15,440,408 10,002,020 3,438,163
33.7 Deferred tax liability charged directly to equity

Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Charged to / reversed from

Deferred tax assets 33.2 (5,178) (3,153) - -
Deferred tax liabilities 33.4 (4,336) 471,888 18,578 1,286
15.9 (9,514) 468,735 18,578 1,286
According to Sri Lanka Accounting Standard - LKAS 12 “Income Taxes”, deferred tax shall be charged or credited directly to
equity if the tax relates to items that are credited or charged, in the same or in a different period, directly to equity. Accordingly,
the deferred tax liability or asset arising on revaluation of Property, Plant & Equipment & Acturial Gain or (Loss) of the Group was
charged directly to revaluation reserve and Retained Earnings in the Statement of Changes in Equity in 2019/20.
Deferred tax assets and liabilities are measured at tax rates that are expected to apply to the year when the asset is realised or
liability is settled, based on the tax rates and tax laws that have been enacted or substantively enacted as at the reporting date.
Deferred tax has been computed at 28% for all standard rate companies (including listed companies), and at 14% for leisure Group
companies and at rates as disclosed in notes 15.7. The deferred tax effect on undistributed reserves of subsidiaries has not been
recognised since the parent can control the timing of the reversal of these temporary differences.
33.8 Deferred tax assets and liabilities set offs

Net deferred tax assets / liabilities of one entity cannot be set-off against another entity’s assets and liabilities since there is no
legally enforceable right to set-off. Therefore net deferred tax assets and liabilities of different entities are separately recognised in
the Statement of Financial Position.
228
LOLC HOLDINGS PLC
34 Intangible assets
Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Goodwill on acquisition 34.1 2,661,847 14,494,566 - -

Other intangible assets 34.5
Computer Software 516,300 664,362 78,828 116,665
License and fees 34.6 350,348 425,364 280,584 355,600
Brand value 34.7 - 9,480 - -
Right to generate solar power 34.8 121,718 128,525 - -
Capital Work-in-Progress (CWIP) 91,076 106,025 54,128 18,614
Total 3,741,289 15,828,322 413,539 490,878
34.1 Goodwill on acquisition

Group
Cost recognised at the point of acquisition 34.2 2,257,167 12,665,035

Effect on currency translation 34.4 463,680 1,888,531
Allowance for impairment (59,000) (59,000)
2,661,847 14,494,566
34.1.1 Net carrying value of goodwill

Goodwill arising on business combinations have been allocated to the following segments for impairment testing. Each segment
consists of several cash generating units (CGU’s).
The recoverable amount of goodwill is determined based on value-in-use calculations. These calculations use cash flow projections
based on financial budgets approved by management. The key assumptions used are given below;
- Business growth – Based on the long-term average growth rate for each business unit. The weighted average growth rate used
is consistent with the forecasts included in industry reports.
- Inflation – Based on current inflation rate.
- Discount rate – Risk free rate adjusted for the specific risk relating to the industry.
- Margin – Based on past performance and budgeted expectations.
Pre-tax discount rates - Discount rates represent the current market assessment of the risks specific to each CGU, regarding
the time value of money and individual risks of the underlying assets which have been incorporated in the cash flow estimates.
The discount rate calculation is based on the specific circumstances of the Group and derived from its Weighted Average Cost
of Capital (“WACC”). The WACC takes into account both debt and equity. The cost of equity is derived from the expected rate of
return on investment by the Group’s investors. The cost of debt is based on the interest bearing borrowing the Group is obliged to
service. Segment specific risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on
publicly available market data.
Terminal growth rate – The forecasted terminal growth rate used does not exceed the longterm average growth rate of the industry
and country in which the entities operate.
Having evaluated the business continuity plans and cash flows of each cash generating unit where the Group has recognised a
goodwill, the Group determined that no impairment provision is required for the carrying value of goodwill due to the COVID-19
pandemic as at the reporting date.
229
LOLC HOLDINGS PLC
34.2 Cost of the goodwill recognised at the point of acquisition

Group
As at 31 March 2020 2019
Ajax Engineers (Private) Limited 10,390 10,390

LOLC Development Finance PLC 400,364 400,364
Ceylon Roots (Private) Limited 46,831 46,831
Commercial Leasing and Finance Company PLC 151,415 151,415
Creations Wooden Fabricators (Private) Limited 8,671 8,671
Excel Restaurant (Private) Limited 20,524 20,524
Palm Garden Hotels PLC 180,299 180,299
Saga Solar Power (Private) Limited 5,038 5,038
Speed Italia Limited 59,000 59,000
Sun & Fun Resorts (Private) Limited 57,643 57,643
LOLC Cambodia Plc - LOCAM 990,000 990,000
PRASAC Microfinance Institution Limited - classified as held for sale 10,414,787 10,414,787
Pak Oman Microfinance Bank Ltd (POMB) 100,784 100,784
NPH Investment (Pvt) Ltd (NPHI) 27,481 27,481
PT LOLC Management Indonesia (PTLMI) 184,831 184,831
Gurind Accor (Pvt) Ltd 31.6.2.4 6,977 6,977
LOLC GEO Technologies (Pvt) Ltd 31.6.1.4 6,919 -
Transfer to assets held for sale (10,414,787) -
2,257,167 12,665,035
Goodwill as at the reporting date has been tested for impairment.
34.3 Effect on currency translation

Goodwill arising on the acquisition of LOCAM, PRASAC, Pak Oman, NPHI and PTLMI (an foreign operations) was treated as
an asset of the foreign operation. Thus it was expressed in the functional currency of the foreign operation and translated at the
closing rate.
Group
Cost recognised at the point of acquisition 11,717,883 11,717,883

Accumulated effect on currency translation 34.4 463,680 1,888,531
1,766,776 13,606,414
230
LOLC HOLDINGS PLC
34.4 Accumulated effect on currency translation

Balance as at 01 April 1,888,531 461,855
Effect on currency translation 1,085,813 1,426,676
Balance as at 31 March 463,680 1,888,531
34.5 Other intangible assets

Computer License and Brand value Customer Right to Capital Total Total
Software fees base generate Work- 2019/2020 2018/2019
solar power in-Progress
(CWIP)
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Note 34.6 34.7 34.7 34.8
Cost
Balance as at 01 April 2019 1,897,325 525,422 94,785 49,422 146,919 106,025 2,819,898 2,092,749
Additions 193,514 9,719 - - - 75,031 278,264 645,377
Disposals - - - - - - - (4,606)
Transfers 89,980 - - - - (89,980) - (2,732)
Acquisition of Subsidiaries 179,000 - - - - - 179,000 -
Disposal of Subsidiaries (9,921) - - - - - (9,921) -
Transfer to assets held for sale (700,620) - - - - (700,620) -
Exchange translation difference 67,168 - - - - - 67,168 89,111
Balance as at 31 March 2020 1,716,446 535,141 94,785 49,422 146,919 91,076 2,633,789 2,819,898
Accumulated amortisation and

Impairment losses
Balance as at 01 April 2019 1,232,964 100,057 85,305 49,422 18,394 1,486,142 1,198,871
Amortisation for the year from 118,482 84,735 9,480 - 7,346 220,043 199,456
Amortisation for the year from 60,179 - - - - 60,179 51,677
Transfers - - - - (539) (539) -
Acquisition of Subsidiaries 178,999 - - - - 178,999 -
Disposal of Subsidiaries (9,562) - - - - (9,562) -
Transfer to assets held for sale (419,658) - - - - (419,658) -
Exchange translation difference 38,743 - - - - 38,743 36,139
Balance as at 31 March 2020 1,200,147 184,793 94,785 49,422 25,201 1,554,348 1,486,143
Carrying amount
Balance as at 31 March 2020 516,300 350,348 - - 121,718 91,076 1,079,442
Balance as at 01 April 2019 664,362 425,364 9,480 - 128,525 106,025 1,333,756
231
LOLC HOLDINGS PLC
34.6 License and fees

This includes the license obtained by LOLC Securities Limited (LOSEC) to operate as a registered stock broker in the Colombo
Stock Exchange (CSE) in 2010/11 financial period. The cost of the license amounted to Rs. 28,242,784/- and the remaining
carrying amount as at 31 March 2020 is Rs. 28,242,784/-.
34.7 Brand value and customer base

These intangible assets were recognised with the acquisition of Commercial Leasing and Finance PLC in May 2008. These
intangible assets identified are separable from the goodwill arose on the acquisition and are recognised based on the present value
of the future cash flows separately identified for these assets.
Initial Remaining
estimation useful life
The estimated useful lives are as follows;

Brand value 10 Yrs -
Customer base 5 Yrs -
34.8 Right to generate solar power

The right represents amount paid to purchase an exclusive right to generate solar electric power. Group will amortise this right over
20 years on a straight line basis beginning from the year of commercial operations.
232
LOLC HOLDINGS PLC
34.9 Other Intangible assets

Company Computer License and Capital Total Total
Software fees Work-in- 2019/2020 2018/2019
Progress
(CWIP)
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Cost
Balance as at 01 April 2019 625,995 427,308 18,614 1,071,917 663,070
Additions 19,846 9,719 35,514 65,079 408,847
Balance as at 31 March 2020 645,841 437,027 54,128 1,136,996 1,071,917
Accumulated Amortisation and Impairment

losses
Balance as at 01 April 2019 509,330 71,708 581,039 442,692
Amortisation during the year 57,683 84,735 142,418 138,347
Balance as at 31 March 2020 567,013 156,443 723,457 581,039
Carrying Amount
Balance as at 01 April 2019 116,665 355,600 18,614 - 490,878
233
LOLC HOLDINGS PLC
35 Property, plant and equipment

Group Freehold Leasehold Freehold Leasehold Freehold Leasehold Furniture &
Lands Lands Buildings Buildings Motor Motor Fittings
Vehicles Vehicles
Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000
Cost/ valuation
Balance as at 01 April 21,006,071 535,704 6,983,233 1,653,015 2,970,558 4,037,346 3,043,554
Additions 29,443 - 135,088 53,646 139,993 - 314,044
Revaluations 1,116,294 - 12,726 - - - -
Disposal - - - (31,847) (208,347) (143,030) (105,604)
Transfers / WIP transfers 117,180 - 4,612,730 28,299 40,654 (9,165) 328,184
Transfers - Investment Properties 1,629,705 - 214,250 - - - -
Acquisition of subsidiaries - - 1,755,360 - 1,460,254 - -
Disposal of subsidiaries (403,000) - (750,977) - (7,358) - (87,071)
Transfer from ROU - - - - - - -
Impairment charges (760,000) - - - - - -
Transfer to assets held for sale - (58,377) - (437,305) (617,811) (3,150) (936,909)
Exchange translation difference (4,083) - 68,386 31,968 134,073 - 75,183
Balance as at 31 March 22,731,610 477,327 13,030,796 1,297,776 3,912,016 3,882,001 2,631,381
Accumulated depreciation and

impairment losses
Balance as at 01 April 140,886 308,297 535,486 1,900,132 999,936 2,113,293
Charge for the year from continuing 12,538 168,015 58,034 161,973 387,657 266,408
operations
Charge for the year from discontinued 2,046 - 39,784 65,446 189 84,466
operations
Disposal - - (30,854) (128,151) (49,430) (80,623)
Transfers / WIP transfers - - - 17,909 (4,975) (99)
Transfers - Investment Properties - - - - - -
Acquisition of subsidiaries - 651,967 - 1,450,413 - -
Disposal of subsidiaries - (93,749) - (7,353) - (37,917)
Transfer to assets held for sale (9,259) (316,271) (464,986) (3,150) (736,721)
Exchange translation difference - 26,499 22,119 120,417 - 56,787
Balance as at 31 March 146,211 1,061,029 308,298 3,115,800 1,330,227 1,665,594
As at 31 March 2020 22,731,610 331,116 11,969,767 989,478 796,215 2,551,774 965,788
As at 31 March 2019 21,006,071 394,818 6,674,936 1,117,529 1,070,425 3,037,410 930,262
234
LOLC HOLDINGS PLC
Office Computers Freehold Leasehold Assets on Other Immovable Capital Work- Total Total
Equipment Plant & Machinery Operating Tangible (JED/SLSPC) in-Progress 2019/20 2018/19
Machinery Leases Assets Assets on (CWIP)
Finance
Lease
(Other than
Bare land)
Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000
35.1 35.2
1,492,763 3,748,699 1,633,255 45,846 74,548 4,306,514 114,648 16,426,056 68,071,812 59,506,898
303,724 560,976 1,121,106 9,870 - 194,743 - 6,223,334 9,085,967 8,348,675
- - - - - - - - 1,129,020 2,160,982
(72,822) (165,085) (721) - (22,000) (239) - (145,988) (895,683) (661,648)
187,537 124,849 476,899 (45,846) (30,443) (366,134) (6,097,222) (632,478) 113,269
- - - - - - - (31,796) 1,812,159 (2,796,994)
- - 27,833,130 - - 31,203,260 - 67,633 62,319,637 105,887
- (27,788) (91,644) - - (458,246) - - (1,826,084) -
- - - - - - - 77,308 77,308 -
- - - - - - - (14,893) (774,893) (1,569)
(78,927) (1,384,778) (4,686) - - (2,612) - (157,083) (3,681,638) -
10,271 132,081 1,151,232 - - 1,689,553 - 1,124,427 4,413,091 1,296,310
1,842,546 2,988,954 32,118,571 9,870 22,105 36,566,839 114,648 17,471,776 139,098,218 68,071,811
1,024,585 2,462,804 956,408 15,632 43,390 776,930 114,388 11,392,167 9,213,881

232,004 442,728 492,185 - 1,013 749,548 - 2,972,103 1,922,372
7,155 196,501 958 - - 482 - 397,027 375,051
(75,460) (159,836) (469) - (19,184) (239) - (544,246) (467,700)

- (187) 12,227 (12,227) (13,559) 880 - (31) 5,134
- - - - - - - (9,442)
- - 9,836,935 - - 12,954,128 - 24,893,443 53,559
- (23,776) (41,859) - - (191,826) - (396,480) -
(47,682) (1,020,727) (4,045) (1,975) (2,604,816)
6,151 88,737 406,721 - - 534,730 - 1,262,161 299,312
1,146,753 1,986,244 11,659,061 3,405 11,660 14,822,658 114,388 37,371,328 11,392,167
695,793 1,002,711 20,459,510 6,465 10,445 21,744,181 259 17,471,776 101,726,889
468,178 1,285,896 676,847 30,214 31,158 3,529,584 259 16,426,056 56,679,644
235
LOLC HOLDINGS PLC
35.1 Other Tangible Assets

Group Water Roads & Cutlery, Linen & Swimming Tools & Others Total
Sanitation & Bridges Crockery & Furnishing Pool Equipments
Others Glassware
Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 (Rs.) Rs. '000 Rs. '000
Cost/ valuation
Balance as at 01 April 24,335 16,780 35,400 85,525 129,736 134,315 3,880,424 4,306,514
Additions - 878 1,734 6,001 6,540 173,724 5,866 194,743
Disposal - - - - - - (239) (239)
Transfers / WIP transfers - - 141,943 23,718 45,939 (61,569) (516,165) (366,134)
Acquisition of subsidiaries - 681,857 - - - 17,065,427 13,455,976 31,203,260
Disposal of subsidiaries - - - - - (15,606) (442,640) (458,246)
Transfer to assets held for sale - - - - - (2,612) - (2,612)
Exchange Translation - 27,122 - - - 1,117,084 545,347 1,689,553
Difference
Balance as at 31 March 2020 24,335 726,637 179,077 115,244 182,215 18,410,763 16,928,569 36,566,839
Balance as at 01 April 19,362 4,444 27,652 74,680 12,991 59,791 578,009 776,930
Charge for the year from 653 5,063 7,178 13,703 13,923 370,983 338,045 749,548
Charge for the year from - - - - - 482 - 482
Disposal - - - - - - (239) (239)
Transfers / WIP transfers - - - - - 880 - 880
Acquisition of subsidiaries - 668,567 - - - 6,273,708 6,011,853 12,954,128
Disposal of subsidiaries - - - - - (9,802) (182,024) (191,826)
Transfer to assets held for sale - - - - - (1,975) - (1,975)
Exchange translation - 26,603 - - - 263,436 244,691 534,730
difference
Carrying Amount
Balance as at 01 April 4,973 12,336 7,747 10,844 116,745 74,524 3,302,415 3,529,584
236
LOLC HOLDINGS PLC
35.2 Revaluation of land and buildings

Accounting judgements,estimates and assumptions
The Group uses the revaluation model of measurement of land and buildings. The Group engaged independent expert valuers, to
determine the fair value of its land and buildings. Fair value is determined by reference to market-based evidence of transaction
prices for similar properties. Valuations are based on open market prices, adjusted for any difference in the nature, location or
condition of the specific property. These valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable
inputs. The date of the most recent revaluation was carried out on 31 March 2018.
As a result of the COVID-19 outbreak in Sri Lanka during the last part of the quarter ended 31 March 2020, a reassessment of the
valuations were obtained by the same independent professional valuers who determined there was no significant change to the
revalued carrying amount provided as at 31 March 2019.
The changes in fair value recognised in other comprehensive income and in the statement of equity. The valuer has used valuation
techniques such as market values and discounted cash flow methods where there was lack of comparable market data available
based on the nature of the property. Consequently, as at the reporting date, the value reflected represents the best estimate based
on the market conditions that prevailed, which in valuers’ considered opinion, meets the requirements in SLFRS-13 Fair Value
Measurement.
35.2.1 Summary description of valuation methodologies

Open market value method (OMV)
Open market value method uses prices and other relevant information generated by market transactions involving identical or
comparable assets, liabilities or a group of assets and liabilities, such as a business.
Direct capital comparison method (DCC)

This method may be adopted when the rental value is not available from the property concerned, but there are evidences of sale
price of properties as a whole. In such cases, the capitalised value of the property is fixed by direct comparison with capitalised
value of similar property in the locality.
Contractors method (CM)

The replacement cost (contractor’s) method is used to value properties which do not generally exchange on the open market and
for which comparable evidence therefore does not exist. The valuations are based on two components: the depreciated cost of the
building element and the market value of the land. Current build costs and often the land price will be established by comparison.
Investment method (IM)

The investment method is used to value properties which are let to produce an income for the investor. Conventionally, investment
value is a product of rent and yield. Each of these elements is derived using comparison techniques.
35.3 Carrying value of fully depreciated assets

The following Property, plant and equipment have been fully depreciated and continue to be in use by the Group.
For the year ended 31 Mar 2020 31 Mar 2019

Rs’000 Rs’000
Cost of the fully depreciated assets 2,796,902 2,482,854
237
LOLC HOLDINGS PLC
35.4 Temporarily Idle Property, Plant and Equipment

There were no idle property, plant and equipment as at the reporting date (2018/19: Nil).
35.5 Property, Plant and Equipment Retired from Active Use

There were no property, plant and equipment retired from active use as at the reporting date (2018/19: Nil).
35.6 Title Restriction on Property, Plant and Equipment

There were no restriction on the title of property, plant and equipment as at 31st March 2020.
35.7 Property, Plant and Equipment Pledged as Security for Liabilities

There were no items of property, plant and equipment pledged as securities for liabilities other than those disclose in Note 48 to
these financial statements.
35.8 Compensation from Third Parties for Items of Property, Plant and Equipment
There were no compensation received during the year from third parties for items of property, plant and equipment that were
impaired, lost or given up (2018/19: Nil).
35.9 Borrowing Cost Capitalisation

Borrowing Costs incurred on borrowings obtained to finance the acquisition, construction or production of qualifying asset, which
takes substantial period of time to get ready for its intended use or sale, have been capitalised during the year. The borrowing cost
capitalisation will be ceased when the respective asset is ready for use.
31 Mar 2019 31 Mar 2018

Rs’000 Rs’000
Capitalised borrowing costs 425,139 635,680
The Group ceased its borrowing cost capitalisation for the qualifying assets under construction as per LKAS 23 immediately post
lockdown of the Capital due to the COVID-19 outbreak. As per the requisite policy, the Group reviewed the carrying values of
property plant and equipment as at the reporting date especially the potential impact the COVID-19 pandemic could have on the
Group’s assets and determined that no impairment is necessary as each subsidiary in the Group has evaluated their business
continuity plans and is satisfied that each of them has taken necessary steps to safeguard the assets.
35.10 The capitalised depreciation costs related to the construction of property, plant & equipment during the year is Rs. 6.02Mn
(2018/19 - Rs. Nil).
35.11 Impairment of Property plant and equipments

There has been an impairment of property, plant & equipment amounting to Rs. 775 mn (2019 - 2mn).
The impairment loss was recognised on land hold by the Group
As per the requisite policy, the Group reviewed the carrying values of property plant and equipment as at the reporting date
especially the potential impact the COVID-19 pandemic could have on the Group’s assets and determined that no impairment is
necessary as each subsidiary in the Group has evaluated their business continuity plans and is satisfied that each of them has
taken necessary steps to safeguard the assets.
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LOLC HOLDINGS PLC
35.12 Immovable (JEDB/SLSPC ) estate assets on Finance Lease (other than bare land)
Group Improvements Buildings Machinery Water Roads and Other vested Total
As at 31 March 2019 to lands sanitation bridges assets
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Capitalised value
Balance as at 01 April 7,173 82,243 16,798 6,610 501 1,323 114,648
Additions - - - - - - -
Balance as at 31 March 2020 7,173 82,243 16,798 6,610 501 1,323 114,648
Accumulated amoritsation
Balance as at 01 April 2018 5,648 82,243 16,798 6,610 242 1,323 112,864
Charged for the period 1,525 - - - - - 1,525
Charged for the period - - - - - - -
Transfers - - - - - - -
Carrying Amount
Balance as at 31 March 2020 - - - - 259 - 259
Balance as at 31 March 2019 - - - - 259 - 259
Right-To-Use of Land on Lease (Leasehold Rights to Bare Land of JEDB/SLSPC Estates)

Lease agreements of all JEDB/SLSPC estates handed over to the Group’s Sub Subsidiary Maturata Plantations Limited have been
executed to date. All of these leases are retroactive to 15/22 June 1992, the dates of formation of the Group’s Sub Subsidiary.
The leasehold rights to the bare land on all of these estates have been taken into the books of the Group’s Sub Subsidiary on
15/22 June 1992, immediately after formation of the Group’s Sub Subsidiary, in terms of the ruling obtained from the Urgent Issue
Task Force (UITF) of the Institute of Chartered Accountants of Sri Lanka. For this purpose, Board of the Group’s Sub Subsidiary
decided at its meetings that lease bare land would be revalued at the value established for this land by Valuation Specialist Dr. D.
R. Wickramasinghe just prior to the formation of the Group’s Sub Subsidiaries. The values as at 22 June 1992 and 15 June 1992
were taken in to the books of Maturata Plantations Limited.
Since the fair value of revalued assets differs materially from its carrying amount, the Board of Directors of Maturata Plantations
Limited on 20 December 2005 has decided a further revaluation to be carried out as at 31 December 2005. The net amounts have
been restated to the new valuation carried out by an independent and qualified valuer, Mr.K.Arther Perera.
The carrying value of Leasehold Right to bare land of JEDB/SLSPC Estates of the Company that would have been included in the
Financial Statements as at 31 March 2020 had the asset been carried at initial valuation less accumulated amortisation.
The Company adopted the application guidelines issued by the Institute of Chartered Accountants of Sri Lanka at the date of
transition to SLFRS 16 (i.e 1 Apri 2019). As per these guidelines there was no impact to the carrying amount of the leasehold right
to JEDB/ SLSPC lands as at 1 April 2019.
The right to use bare land on lease of JEDB/SLSPC estates is being amortised by equal amounts over a 53 year period and the
unexpired period of the lease as at the financial reporting date is 25.25 years.
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LOLC HOLDINGS PLC
35 Property, plant and equipment

Company Freehold Freehold Freehold Motor Leasehold Motor Furniture &
Lands Buildings Vehicles Vehicles Fittings
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
Cost/Valuation
Balance as at 01 April 2,906,500 454,165 1,361,727 315,958 761,240
Additions - - 8,780 - 96,634
Disposal - - (160,743) - (68,154)
Transfers - Investment Properties - - - - -
Impairment (760,000) - - - -
Amalgamation - - - - -
Balance as at 31 March 2019 2,146,500 454,165 1,209,764 315,958 789,720
Accumulated Depreciation and impairment

losses
Charge for the year from continuing 14,262 44,019 33,746 83,107
operations
Revaluations - - - -
Disposal - (89,170) - (47,462)
Transfers / WIP transfers - - - -
Amalgamation - - - -
Carrying Amount
As at 31 March 2020 2,146,500 423,260 597,999 209,736 228,341
As at 31 March 2019 2,906,500 437,522 704,811 243,482 235,506
240
LOLC HOLDINGS PLC
Office Computers Assets on Capital Work-in- Total Total

Equipment Operating Progress 2019/20 2018/19
Leases (CWIP)
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
823,331 1,424,202 22,106 439,872 8,509,102 7,893,089

75,620 175,591 - 206,221 562,846 845,345
(47,859) (78,104) - (145,988) (500,848) (258,949)
16,200 - - (16,200) - 7,456
- - - - (760,000) -
- - - - - 22,161
867,292 1,521,689 22,106 483,905 7,811,100 8,509,102
591,886 956,137 10,648 2,830,440 2,523,480

93,995 199,796 1,013 469,938 440,360
- - - - -
(47,655) (77,428) - (261,715) (151,933)
- - - - 5,134
- - - - 13,399
638,226 1,078,505 11,661 3,038,663 2,830,440
229,066 443,184 10,445 483,905 4,772,437
231,445 468,065 11,458 439,872 5,678,662
241
LOLC HOLDINGS PLC
35.11 Property, plant & equipment includes fully depreciated assets that are still in use having a gross amount of Rs. 1,845 Mn as at
31 March 2020 (2018/19 - Rs. 1,514 Mn)
35.12 The fair value of the revalued properties were determined by Mr. W.M Chandrasena, an independent valuer who holds recognised
and relevant professional qualification and have recent experience in the location and category of the revalued properties.
Date of the revaluation 31/3/2019

Method of determining fair value Sales comparison
There is no significant difference in fair value of properties from 31 March 2019 to 31 March 2020.
If land and buildings were measured using the cost model, the carrying amounts would be as follows:
As at 31 March 2020 2019

Rs’000 Rs’000
Cost 648,924 727,448

Accumulated depreciation and impairment (44,534) (39,291)
604,390 688,157
35.13 Property, Plant and Equipment Pledged as Security for Liabilities

There were no items of property, plant and equipment pledged as securities for liabilities other than those disclose in Note 49 to
these financial statements.
35.14 The following table shows the valuation techniques used in measuring the fair value of significant properties of the group, as well as
the significant unobservable inputs used.
Sales comparison method Per perch value The estimated fair value would increase
- value derived based on Colombo Region - Rs. 1.1 Mn to 13 Mn (decrease) if:
recent transactions of similar Southern Coast Region - Rs. 0.45 Mn - to Rs. 1 - comparable property value was higher /
properties Mn (lesser)
Other Regions - Rs. 0.035 Mn to Rs. 4 Mn
Depreciated replacement Value per square feet determined based on The estimated fair value would increase
cost method similar properties value, depreciated for period (decrease) if:
used and adjusting acquisition cost - Depreciation rate was lesser / (higher)
- Square feet value was higher / (lesser)
242
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36 Trading liabilities - fair value through profit or loss

Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Derivative liabilities
Forward rate agreements 114,349 841,492 - -
114,349 841,492 - -
Impact of COVID-19 pandemic on derivative financial liability as at 31 March 2020 is elaborated in detail in note 58 - Financial risk
management objectives and policies.
37 Financial liabilities at amortised cost/ Deposits liabilities

37.1 Deposits from customers
Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Fixed deposits 37.2 196,983,751 411,570,694 - -

Saving / Demand deposits 37.3 17,881,792 35,661,668 - -
Interest / profits payable 37.4 6,119,586 4,842,678 - -
220,985,129 452,075,041 - -
37.2 Fixed deposits

Local currency deposits - -
Conventional deposits 103,570,800 134,235,759 - -
Islamic - Mudharabah 4,611,074 4,788,306 - -
Islamic - Wakala 7,386,707 4,103,088 - -
Foreign currency deposits - -
Others 196,983,751 411,570,694 - -
37.3 Saving / Demand deposits

Local currency deposits - -
Islamic 832,622 734,535 - -
Foreign currency deposits - -
Others 17,881,792 35,661,668 - -
37.4 Interest / profits payable

Interest payable on conventional deposits 5,902,104 4,621,463
Profits payable on Islamic deposits 217,482 221,215
6,119,586 4,842,678 - -
243
LOLC HOLDINGS PLC
37.5 Analysis of Due to Other Customers/Deposits from Customers

a) By currency
Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Sri Lankan Rupee 127,507,959 142,581,575 - -

United States Dollar 85,315,808 287,659,307 - -
Cambodian Riel 5,221,252 19,323,734 - -
Pakistani Rupee 7,641 8,615 - -
Myanmar Kyat 2,547,481 1,215,436 - -
Others 384,987 1,286,373 - -
Gross loans and receivables 220,985,128 452,075,041 - -
38 Financial liabilities at amortised cost/ Interest bearing borrowings

Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Commercial papers & promissory notes 33,851,128 25,889,571 34,949,429 12,760,945

Short-term loans and others 71,821,448 62,983,047 45,992,504 41,567,796
Debentures 38.1 18,752,371 20,812,030 6,985,839 7,808,439
Finance lease liabilities 38.2 953,611 485,234 95,346 133,048
Long-term borrowings 38.3 189,450,021 267,256,359 6,735,829 7,624,808
Operating Lease Liability 38.4 8,198,503 - 653,848 -
323,027,083 377,426,242 95,412,795 69,895,035
38.1 Information on Group’s listed debentures

38.1.1 Interest rate of comparable government security
Buying and selling prices of treasury bond at the auction held on 16 March 2020
Price Buying Price Selling

Price Yield Price Yield
% %
4 Year Bond 104.64 9.81 104.97 9.68

5 Year Bond 106.30 9.99 106.79 9.87
244
LOLC HOLDINGS PLC
38.1.2 Market prices and yield during the year (ex-interest)

Market Yield Market Price
% %
4 Year Bond 9.61 104.81

5 Year Bond 9.61 106.55
Current period
Yield to maturity of trade done on 31 March 2020 9.36%
Debt to equity 2.05 times

Interest cover 0.15 times
Quick asset ratio 0.45 times
38.1.3 The market prices during the period (ex interest)
Current period
Highest price 103.42

Lowest price 102.49
Last traded price 103.26
38.2 Finance lease liabilities

Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
JEDB/SLSPC estates lease liabilities 38.2.1 95,158 50,415 - -

Other lease liabilities 38.2.2 858,453 434,819 95,346 133,048
953,611 485,234 95,346 133,048
245
LOLC HOLDINGS PLC
38.2.1 JEDB/SLSPC estates lease liabilities

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Gross Liability
Impact on adoption of SLFRS 16 262,106 - - -
Repayments (13,248) (3,137) - -
Finance costs allocated to future years (236,046) (31,931) - -
Disposal of subsidiaries - - -
Net Liability 95,158 50,415 - -
Payable within one year

Gross liability 13,248 3,137 - -
Net liability transferred to current liabilities 515 1,120 - -
Payable within two to five years

Net liability 2,898 4,948 - -
Payable after five years

Net liability 91,745 44,347 - -
246
LOLC HOLDINGS PLC
38.2.2 Other lease liabilities

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Gross lease rentals payable as at 01 April 504,135 711,284 165,697 55,181

Leases obtained during the year 412,659 166,760 - 154,062
Disposal of subsidiaries (1,327) - - -
Amortised interest 235,999 - - -
Lease rentals paid during the year (260,133) (373,908) (53,094) (43,546)
Gross lease rentals payable as at 31 March 891,333 504,135 112,603 165,697
Less: Unamortised finance cost (32,880) (69,316) (17,257) (32,649)
Net lease liability 858,453 434,819 95,346 133,048
Repayable within one year

Gross lease rentals payable 394,084 259,545 50,831 53,094
Repayable after one year before five years

Gross lease rentals payable 579,388 245,037 61,772 112,603
247
LOLC HOLDINGS PLC
38.3 Long-Term Borrowings

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Gross balance as at 01 April 267,479,655 223,714,167 7,639,515 4,849,026

Received during the year 118,584,523 138,142,996 2,323,069 3,222,672
Amortised interest 2,416,671 - 895,219
Acquisition of subsidiaries 1,850,857 264 260,773 -
Effect of Amalgamation - - - 4,153,132
Repaid during the year (92,836,408) (103,292,430) (4,382,747) (4,585,314)
Transfer to assets held for sale (122,864,242) - - -
Exchange translation difference 15,164,560 8,914,658 - -
Gross borrowings as at 31 March 189,795,616 267,479,655 6,735,829 7,639,515
Less: Unamortised finance cost (345,595) (223,296) - (14,707)
Balance as at 31 March 189,450,021 267,256,359 6,735,829 7,624,808
Long-term borrowings - current 73,527,729 124,659,430 4,056,000 3,492,318

Long-term borrowings - non-current 115,922,292 142,596,929 2,679,829 4,132,490
Total 189,450,021 267,256,359 6,735,829 7,624,808
Analysis of non-current portion of long-term borrowings

Repayable within 3 years 94,959,190 129,062,552 2,679,829 3,895,750
Repayable after 3 years 20,963,102 13,534,377 - 236,740
Total 115,922,292 142,596,929 2,679,829 4,132,490
The borrowings include long term and short term loans which carry interest rates which are variable and are reset on a monthly
/ quarterly /semi-annually / annual basis. Consequent to the merger with the two subsidiaries call LOFC and LOMC certain debt
covenants are being renegotiated with the lenders to suit the merged entity. As a result, loans amounting to Rs. 7,808mn has been
classified as current even though the contractual maturity is long term. Of this amount Rs. 6,300mn has a contractual maturity
within 1-3 years and Rs. 1,508mn has a maturity after 3 years.
248
LOLC HOLDINGS PLC
38.4 Operating Lease Liability

Group Company
2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Opening Balance - - - -
Discounted operating lease commitments balance as at April 9,208,526 - 669,495 -
1, effect of adoption of IFRS 16
Leases obtained during the year 1,274,843 - 28,100 -
Amortised interest 878,355 - 83,239 -
Lease rentals paid during the year (1,377,498) - (126,986) -
Reversal on early termination (2,633) -
Exchange Translation Difference 400,826 - - -
Net lease liability 8,198,503 - 653,848 -
Repayable within one year

Gross lease rentals payable 1,279,847 - 144,329 -
Less: Unamortised finance cost (1,016,424) - (78,190) -
Net lease liability 263,423 - 66,139 -
Repayable after one year before five years

Repayable after five years

Total 8,198,503 - 653,848 -
The loans are subject to a moratorium on capital repayment and interest accrued during the moratorium to be capitalised.
Repayment terms of the interest capitalised portion of the loan is different to that of underlying loan.
In addition to the moratoriums secured on loan repayments of tourism sector post Easter Sunday attack, The Group is actively
engaged with banks and financial institutions to secure further debt moratoriums to strengthen the liquidity position of the Group
amidst the economic slowdown caused by COVID-19 pandemic.
249
LOLC HOLDINGS PLC
Analysis of loans and borrowings

a) Debenture detail
Interest Payable Frequency
Year of Issue Type of Issue Fixed Fixed Fixed Group Company
Rate Rate Rate
Annually Semi- Quarterly
Annually
2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.’000 Rs.’000
Debentures/ Bonds
2014 2019 Senior, Unsecured, listed, - - 9.00% - 5,000,000 - 5,000,000
Redeemable, Rated Debentures
2017 2022 Senior, Unsecured, listed, - 13.00% - 2,000,000 2,000,000 2,000,000 2,000,000
2017 2019 Senior, Unsecured, listed, - 12.65% - - 750,000 - 750,000
2019 2023 Senior, Unsecured, listed, - 15.00% - 5,000,000 - 5,000,000 -
2015 2020 Senior, Unsecured, listed, 9.75% - - 5,000,000 5,000,000 - -
2015 2019 Senior, Unsecured, listed, 9.25% - - - 4,748,910 - -
2015 2019 Senior, Unsecured, listed, - 9.10% - - 1,030 - -
2015 2019 Senior, Unsecured, listed, - 0.00% 9.00% - 250,060 - -
2018 2023 Senior, Unsecured, listed, - 14.75% 1,793,799 1,793,799 - -
2018 2023 Senior, Unsecured, listed, 20.13% - - 706,201 706,201 - -
2019 2022 Senior, Unsecured, listed, 9%-8% - - 4,000,000 - - -
(plain and foreign exchange-
indexed bond)
Amortise cost/ disbursement 252,731 562,030 (14,161) 58,439
fees
18,752,731 20,812,030 6,985,839 7,808,439
Note
1. AWPLR (Five-year floating rate) – (‘AWPLR’ means the simple average of the Average Weighted Prime Lending Rate published by
the Central Bank of Sri Lanka for the 12-week period, immediately preceding each Interest Determination Date).
250
LOLC HOLDINGS PLC
39 Insurance contract liabilities

Group
As at 31 March 2020 2019
Long-term insurance contracts 39.1 4,283,247 3,458,728

Non-life insurance contracts 39.2 4,358,359 3,718,662
Total insurance contract liabilities 8,641,606 7,177,389
Both life & general insurance companies of the group has satisfied liability adequacy test.
39.1 Long-term insurance contract liabilities

Group
2020 2019
As at 31 March Insurance Reinsurance of Net Insurance Reinsurance of Net
Contract liabilities Contract liabilities
liabilities liabilities
Rs.’000 Rs.’000 Rs.'000 Rs.’000 Rs.’000 Rs.'000
At 01 April 3,709,535 (315,351) 3,394,184 2,920,097 (150,139) 2,769,958

Premiums received 2,820,110 (209,932) 2,610,178 2,483,480 (222,166) 2,261,314
Claims incurred (649,739) 80,710 (569,029) (585,485) 42,602 (542,882)
Fees deducted (310,608) 12,597 (298,011) (287,059) 14,352 (272,707)
Investment return 388,859 - 388,859 326,205 - 326,205
Expenses (1,221,181) - (1,221,181) (1,495,977) - (1,495,977)
Gratuity - actuarial gain/ (4,554) - (4,554) 1,905 - 1,905
(loss)
Net gain / (loss) on 91,817 - 91,817 (46,594) - (46,594)
available-for-sale assets -
Life Policyholders
Life deficit transfer (207,025) - (207,025) 392,963 - 392,963
4,617,214 (431,976) 4,185,238 3,361,261 (315,351) 3,394,185
Claims outstanding 98,009 98,009 64,543 - 64,543
At 31 March 4,715,223 (431,976) 4,283,247 3,425,804 (315,351) 3,458,728
251
LOLC HOLDINGS PLC
39.2 Non-life insurance contract liabilities

Group
2020 2019
As at 31 March Insurance Reinsurance Net Insurance Reinsurance Net
Contract of liabilities Contract of liabilities
Note Rs.’000 Rs.’000 Rs.'000 Rs.’000 Rs.’000 Rs.'000
At 01 April
Provision for reported claims 39.3 1,216,435 (455,501) 760,934 949,462 (314,916) 634,546
IBNR 442,106 - 442,106 441,772 - 441,772
Outstanding claims provision 1,658,541 (455,501) 1,203,040 1,391,234 (314,916) 1,076,318
Commission reserves (144,597) 132,108 (12,489) (106,591) 115,416 8,825
Provision for unearned premiums 39.4 3,261,530 (549,223) 2,712,307 2,741,642 (423,040) 2,318,603
Provision for liability adequacy - - - - - -
Total non-life contract liabilities 4,775,474 (872,616) 3,902,858 4,026,283 (622,540) 3,403,745
39.3 Outstanding claims provision

2020 2019
As at 31 March Insurance Reinsurance Net Insurance Reinsurance Net
Contract of Contract of
liabilities liabilities liabilities liabilities
Rs.’000 Rs.’000 Rs.'000 Rs.’000 Rs.’000 Rs.'000
At 01 April 949,462 (314,916) 634,545 994,916 (421,269) 573,647

Claims incurred in the current accident year 3,194,638 (1,048,904) 2,145,734 2,407,723 (249,190) 2,158,533
Adjustment to prior year due to changes in 1,529 1,529 -
assumptions
Other movement in prior year - - - -
Claims paid during the year (2,927,665) 906,790 (2,020,875) (2,453,177) 355,542 (2,097,635)
Total non-life contract liabilities 1,216,435 (455,501) 760,934 949,462 (314,916) 634,545
2020 2019
Rs.’000 Rs.’000 Rs.'000 Rs.’000 Rs.’000 Rs.'000
At 01 April (106,591) 115,416 8,826 (126,672) 167,209 40,537

Change in commission (38,006) 16,692 (21,314) 20,081 (51,793) (31,711)
reserves
Total non-life contract (144,597) 132,108 (12,488) (106,591) 115,416 8,826
liabilities
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LOLC HOLDINGS PLC
39.4 Provision for unearned premiums

2020 2019
Rs.’000 Rs.’000 Rs.'000 Rs.’000 Rs.’000 Rs.'000
At 01 April 2,741,642 (423,040) 2,318,603 2,742,246 (652,040) 2,090,206

Premiums written in the 5,601,256 (1,135,285) 4,465,971 4,638,206 (817,983) 3,820,222
year
Premiums earned during (5,081,367) 1,009,102 (4,072,265) (4,638,809) 1,046,984 (3,591,826)
the year
At 31 March 3,261,531 (549,223) 2,712,309 2,741,642 (423,040) 2,318,603
The valuation of the insurance contract liabilities in relation to the life business was performed by an external actuary as at 31
December 2019. Management has determined that, there is no material impact on the assumptions used for the valuation of
insurance contract liabilities due to the COVID-19 outbreak as at 31 March 2020 as management has determined that it is not
required to change the operative assumptions.
40 Current tax payables

Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Income tax payables 40.1 2,799,541 3,563,910 78,150 55,652

Value added tax (VAT) payable 1,951,485 1,918,850 551,843 626,432
GST Payable 151,686 - - -
With-holding tax (WHT) payable 387,696 369,058 18,165 35,387
Economic service charge (ESC) payable 2,472 14,353 - -
Nation building tax (NBT) payable 30,409 82,125 16,614 27,399
Other tax payables 315,329 214,334 (4,449) (11,716)
5,250,922 6,162,630 660,323 733,155
40.1 Income tax payables

Balance at the beginning of the year 3,563,910 3,060,904 55,652 41,705
Provision for the Period 9,736,726 9,349,516 22,498 13,947
Under/ (over) provision in respect of previous years (239,520) (2,077,549) - -
Transfer to Income Tax Receivables (7,490) (25,164) - -
Payments made during the year (9,089,992) (6,882,441) - -
Exchange translation difference 75,755 138,644 - -
Balance at the end of the year 2,799,541 3,563,910 78,150 55,652
253
LOLC HOLDINGS PLC
41 Trade and other payables

Group Company
As at 31 March 2020 2019 2020 2019
Financial liabilities Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Trade payables 8,361,982 17,561,968 399,999 446,253

Creditors for leased equipment - 3,018,919 - -
Amount due to related companies 51.3.2 3,631,504 3,558,386 903,398 1,232,985
Insurance premium payable 132,702 158,488 - -
Staff related payments 145,158 1,195,651 3,474 2,851
Dividend payable 26,007 - 495 -
Other financial liabilities 627,053 390,550 22,527 22,958
12,924,406 25,883,963 1,329,893 1,705,046
Non-financial liabilities
Accrued expenses/ advance payment 2,970,939 2,959,509 57,587 88,606
Excess payment received 444,803 472,612 2,566 3,766
Security Deposits Received 722,786 - - -
Provisions made 323,548 - - -
Advances received 1,144,159 - - -
Other non-financial liabilities 1,807,685 966,076 - -
Expected credit loss allowance on undrawn credit 41.1 2,207 3,604 - -
commitments and financial guarantees
7,416,127 4,401,801 60,153 92,372
20,340,533 30,285,764 1,390,046 1,797,418
41.1 Expected credit loss allowance on undrawn credit commitments and financial guarantees
Group Company
2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Stage 01
Balance as at 1 April 3,604 - - -
Adjustment on initial application of SLFRS 9 - - - -
Adjusted balance as at 1 April 3,604 - - -
Charge/ (reversal) to Income statement (1,397) 3,604 - -
254
LOLC HOLDINGS PLC
42 Deferred income
Group
As at 31 March Capital Operating Transfer of Income Total Total
grants lease shares received in 2019/2020 2018/2019
receivables - advance
PHDT
Note 42.1 42.2 42.3

Rs.’000 Rs.’000 Rs.'000 Rs.’000 Rs.’000 Rs.'000
Group
Gross deferred income
Balance as at 01 April 2019 160,508 10,735 63,994 111,904 347,141 337,808
Deferred Income received - - - 42,967 42,967 4,002
Transfers/re-classifications / - - - (104,992) (104,992) 5,331
Adjustments
Balance as at 31 March 2020 160,508 10,735 63,994 49,879 285,116 347,141
Balance as at 01 April 2019 81,074 7,324 15,190 89,897 193,485 153,404
Amortised to profit & loss 4,635 537 1,861 - 7,033 32,771
Transfers/re-classifications / - - - (76,912) (76,912) 7,310
Adjustments
Balance as at 31 March 2020 85,709 7,861 17,051 12,985 123,606 193,485
Carrying amount
Balance as at 31 March 2020 74,799 2,874 46,943 36,894 161,509
Balance as at 01 April 2019 79,434 3,411 48,804 22,007 153,655
42.1 Capital grants

The above capital grants represent the following;
1 Funds received from the Plantation Housing and Human Development Trust (PHDT), MTIP, MPI for the development of workers
welfare facilities and improvements to institutional facilities.
2 Funds received from the Plantation Reform Project for the development of Forestry Plantations.
The amounts spent is capitalised under the relevant classification of Property, Plant and Equipment. The corresponding grant
component is reflected under Deferred Income and is being amortised over the useful life span of the related asset.
Grant related to the biological assets which are measured at fair value less point to sell cost is directly charged to the carrying value
of such assets in accordance with the Sri Lanka Accounting Standards.
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LOLC HOLDINGS PLC
42.2 Operating lease receivables - PHDT

Premises at St.Andrew’s Drive in Nuwara Eliya has been leased out to Plantation Human Development Trust for a period of 20 years
commencing from August’2005 at a total lease rental of Rs. 10.73 Mn.
Lease Rentals received are deferred and amortised over the lease period commencing from August 2005.
The timing of future operating lease rentals are as follows;
Group
As at 31 March 2020 2019
Rs.'000 Rs.'000
Less than one year 537 537

Between one and five years 2,146 2,147
More than five years 191 728
2,874 3,411
42.3 Deferred income in respect of transfer of shares - Maturata Plantations PLC

This represents the value of 6,399,375 number of shares received by Maturata Plantations Limited originally equivalent to 20%
of the issued Ordinary Shares of RFELL at Rs.10/-each in lieu of releasing the leasehold rights of 488 Hectares in Enselwatte ,
Deniyaya for Eco Tourism Project. The value of Ordinary Shares are deferred and amortised over the unexpired balance lease
period. However, due to the rights issue shareholdings percentage has come down from 20% to 13.44% subsequently.
The timing of future operating lease rentals are as follows;
Group
As at 31 March 2020 2019
Rs.'000 Rs.'000
Less than one year 1,861 1,861

Between one and five years 7,445 7,445
More than five years 37,637 39,498
46,943 48,804
256
LOLC HOLDINGS PLC
43 Retirement benefit obligations

Group Company
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Balance as the beginning of the period 1,600,388 1,434,161 343,927 291,463

Acquisition of subsidiaries 31.6.1.3 6,263 4,752 - 3,821
Benefits paid by the plan (757,960) (434,046) (26,663) (14,130)
Expenditure recognised in the income statement 43.1 350,140 269,590 69,479 58,182
from continuing operations
Expenditure recognised in the income statement 611,958 249,726 - -
from dis continuing operations
(Gain)/Loss arising from changes in assumptions 218,369 59,364 (66,351) 4,591
Exchange translation difference 13,120 16,840 - -
Transfer to assets held for sale (179,986) - - -
Balance as at the end of the period 1,850,445 1,600,388 320,392 343,927
43.1 Expense recognised in the income statement

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Current service costs from continuing operations 287,870 198,800 32,191 25,737
Interest Costs from discontinued operations 62,270 70,790 37,288 32,445
Expense recognised in the income statement from 350,140 269,590 69,479 58,182
Current service costs from discontinuing operations 503,125 184,152 - -

Interest Costs from discontinued operations 108,833 65,574 - -
Expense recognised in the income statement from 611,958 249,726 - -
962,098 519,316 69,479 58,182
43.2 Actuarial assumptions

Principal actuarial assumptions at the reporting date;
Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Discount rate % 10.5-11.5% 12% 10.5% 11%

Future salary increases % 8.5% - 9% 9% 8.5% 9%
Staff Turnover Factor % 8.06% 2.5% - 15% 8.06% 8.20%
Retirement Age Yrs 55-60 55-60 55 55
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LOLC HOLDINGS PLC
43.3 Sensitivity of the actuarial assumptions

2020 2019
Assumption Financial Comprehensive Financial Comprehensive
Position - Income - Position - Income -
Liability Charge for the Liability Charge
period for the period
Rate Rs.'000 Rs.'000 Rs.'000 Rs.'000
change
Group
Discount rate +1% (116,423) 116,423 (228,217) 228,217
-1% 124,258 (124,258) 256,241 (256,241)
Future salary increases +1% 115,785 (115,785) 243,806 (243,806)
-1% (116,289) 116,289 (206,813) 206,813
Company
Discount rate +1% (15,425) 15,425 (15,187) 15,187
-1% 17,234 (17,234) 25,032 (25,032)
Future salary increases +1% 16,665 (17,234) 20,383 (20,383)
-1% (15,186) 15,186 (18,384) 18,384
The provision for retirement benefits obligations for the year is based on the actuarial valuation carried out by professionally qualified
actuaries as at 31 March 2020. The actuarial present value of the promised retirement benefits as at 31 March 2020 amounted to
Rs. 1,850mn/- (Company - Rs. 320.3mn/-). The liability is not externally funded.
Due to the sudden fall in capital markets and the decline in high-quality corporate bond rates that has occurred as a result of
COVID-19, the Group has considered the impact on the defined benefit obligations with the independent actuarial specialists as
at the reporting date. Since the complexity of the valuation and the underlying assumptions are based on long-term indicators
including the application of risk discount rate which is formulated on the market yield of long-term government and corporate
bonds, there is no significant impact on the retirement benefit obligation from COVID-19 pandemic other than for certain
assumptions disclosed above.
Discount rate
In the absence of a deep market in long-term bonds in Sri Lanka, a long-term interest rate of 10%-11.5% p.a. (2018/19 – 11.5%
p.a.) has been used to discount future liabilities considering the yield available on long term government bonds with a tenure
equivalent to the average future working life of the employees.
Long term salary increments
Based on the actual salary increment rates of the Group over the past few years, future economic outlook of the country and
the immediate impact of the COVID-19 pandemic on the Group’s business a reduction in the long-term salary increment rate is
factored into the valuation for the current year.
Mortality - GA 1983 Mortality Table

Disability - Long-Term Disability 1987 Soc. Sec. Table
Retirement Age - Normal Retirement Age, or Age on Valuation Date, if greater
The Group and company does not have any material issues pertaining to the employees and Industrial relations as of 31 March
2020.
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LOLC HOLDINGS PLC
43.4 Maturity analysis of the payments
The following payments are expected on employee benefit liabilities in future years
Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Within the next 12 months 254,097 198,850 36,030 35,448

Between 1 and 2 years 291,851 226,030 81,217 93,793
Beyond 10 years 240,532 232,222 - -
Total expected payments 2,304,898 2,012,463 531,072 565,299
The provision for retirement benefits obligations for the year is based on the actuarial valuation carried out by professionally qualified
actuaries as at 31 March 2020. The actuarial present value of the promised retirement benefits as at 31 March 2020 amounted to
Rs. 1,850mn/- (Company - Rs. 320.4mn/-). The liability is not externally funded.
44 Stated capital
Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Issued and Fully Paid 44.1 475,200 475,200 475,200 475,200
No. of Shares 44.2 475,200 475,200 475,200 475,200
All shares rank equally with regard to the Company’s residual assets. The holders of ordinary shares are entitled to receive
dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company.
44.1 Movement in stated Capital

Group Company
2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Balance at the beginning of the period 475,200 475,200 475,200 475,200

Balance at the end of the period 475,200 475,200 475,200 475,200
44.2 Movement in no. of shares

Balance at the beginning of the period 475,200 475,200 475,200 475,200
Balance at the end of the period 475,200 475,200 475,200 475,200
259
LOLC HOLDINGS PLC
45 Reserves
Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Revaluation reserve 45.1 8,968,483 8,913,715 2,036,313 2,715,503

Cash flow hedge reserve 45.2 (186,593) (98,127) - -
Fair value reserve 45.3 58,047 (537,825) (92,223) (92,223)
Translation reserve 45.4 8,017,646 4,456,036 - -
Future taxation reserve 45.5 205,000 205,000 205,000 205,000
Statutory reserve fund 45.6 11,727,849 7,988,221 - -
Merger/ Amalgamation Reserve 31.1 - - 8,531,863 (115,592)
28,790,432 20,927,020 10,680,953 2,712,688
Nature and purpose of reserves

45.1 Revaluation reserve
The revaluation reserve relates to the revaluation surplus of Property, Plant and Equipment . Once the respective revalued items
have been disposed, the relevant portion of revaluation surplus if any is transferred to retained earnings.
45.2 Cash flow hedge reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in
fair value hedges pending subsequent recognition of the hedged cash flows.
45.3 Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of financial assets at FVOCI includes changes in fair
value of financial instruments designated as financial assets at FVOCI a until the assets are derecognised or impaired.
45.4 Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign
operations.
45.5 Future taxation reserve

This reserve was created in order to accommodate unexpected future tax liabilities that might arise at a future date.
45.6 Statutory reserve fund

The Statutory reserves of LOLC Finance PLC and Commercial Leasing and Finance PLC were created in accordance with the
Finance Companies (Capital Funds) Direction No. 01 of 2003 issued under the Finance Business Act No. 42 of 2011 (which
supersedes the Finance Companies Act No. 78 of 1988) which requires the Company to transfer 20% of its annual profit to
this reserve. Foreign finance entities of the group also maintain a reserve requirement in compliance to their local regulatory
requirements.
46 Retained earnings
The carrying amount of the retained earnings represents the undistributed earnings held by the Group and the Company. This
could be used to absorb future losses and dividend declaration.
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LOLC HOLDINGS PLC
47 Commitments and contingencies

As at 31 March
Contingent liabilities are possible obligations whose existence will be confirmed only by uncertain future events or present
obligations where the transfer of economic benefits is not probable or cannot be readily measured as defined in the Sri Lanka
Accounting Standard – LKAS 37 (Provisions, Contingent Liabilities and Contingent Assets).
In the normal course of business, the Group makes various commitments and incurs certain contingent liabilities with legal recourse
to its customers. No material losses are anticipated as a result of these transactions.
To meet the financial needs of customers and subsidiaries, the Company/ Group enters into various irrevocable commitments and
contingent liabilities. These consist of financial guarantees, letter of credit and other undrawn commitments to lend. Letter of credit,
guarantees and acceptance commit the group to make payments on behalf of customers or subsidiaries in the event of a specific
act, generally related to the import or export of goods. Guarantees and standby letters of credit carry a similar credit risk to loans.
Contingent liabilities are not recognised in the Statement of Financial Position but are disclosed unless its occurrence is remote.
Operating lease commitments of the Group (as a lessor and as a lessee) form part of commitments and pending legal claims
against the Group form part of contingencies.
Even though these obligations may not be recognised on the Statement of Financial Position, they do contain credit risk and are
therefore part of the overall risk of the group as disclosed in Note 58.
In the normal course of business, the group makes various irrevocable commitments and incurs certain contingent liabilities with
legal recourse to its customers. Even though these obligations may not be recognised on the date of the Statement of Financial
Position, they do contain credit risk and are therefore form part of the overall risk profile of the group.
47.1 Contingent liabilities

Group Company
2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Guarantees issued to banks and other institutions 5,698,216 6,392,181 319,455 332,055
Corporate guarantees given to subsidiaries to obtain 8,477,113 17,888,000 3,550,000 12,300,000
loans
14,175,329 24,280,181 3,869,455 12,632,055
47.2 Commitments
Group Company
As at 31 March 2020 2019 2020 2019
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Forward exchange contracts 47.2.1 19,557,687 38,015,922 - -

Capital commitments 47.2.2 10,437,589 5,902,613 - -
Letter of credits opened 1,130,882 64,249 - -
Undrawn credit commitments 23,343,910 15,884,005 - -
Operating lease commitments 47.2.3 30,238,514 24,956,397 48,309 61,959
84,708,582 84,823,187 48,309 61,959
47.2.1 On the commitment for forward exchange contracts, the Group will receive USD 67,518,750/- Euro 27,100,000/- GBP
2,700,000/- AUD 4,500,000/- on the conversion.
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LOLC HOLDINGS PLC
47.2.2 Capital commitments

The Group has commitments for acquisition of property, plant & equipment and intangible assets incidental to the ordinary course
of business which have been approved by the Board of Directors, the details of which are as follows:
Capital commitments Group Company

As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Commitments in relation to property, plant & equipment

Approved and contacted for 9,706,880 730,709 - -
Approved but not contacted for 730,709 5,171,904 - -
10,437,589 5,902,613 - -
a) Browns Ari Resort Private Limited

The Board of Directors of Browns Ari Resort Private Limited has approved USD 17.79 Mn budget for the construction of a resort in
Bodufinolhu Island in Republic of Maldives.
b) Bodufaru Beach Resort Private Limited

The Board of Directors of Bodufaru Beach Resort Private Limited has approved USD 102 Mn budget for the construction of a
tourist resort in Republic of Maldives.
c) NPH Investment Private Limited

NPH Investment Private Limited is required to construct and develop a hotel in accordance with development concept submitted
by the management and approved by the Government of Maldives, within a maximum period of twenty (36) months from
the commencement date of the lease agreement entered. However, said agreement has been amended and has extended
construction period for another 18 months period until 27 May 2020. The commitment for construction of the city hotel of NPH
Investment Private Limited as at 31 December was USD 29 Mn.
d) Riverina Resort (Private) Limited

Riverina Resorts (Private) Limited is in the process of putting up a 475 key, 5 star, 20 Acre Resort situated in Golden Mile Bentota.
The total cost was estimated to be Rs. 7,200 Mn. out of which Rs. 3,475 Mn already incurred.
47.2.3 Operating lease commitments

The Group leases a number of Land, branch and office premises under operating leases. The leases generally run for a period of
10-50 years. The future minimum lease payments under non-cancellable operating leases, payable based on the maturity of the
Lease Contracts as at 31st March are as follows:
Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Within one year 1,129,847 1,505,921 23,990 29,491

Between one and five years 4,212,347 5,163,550 20,044 28,667
More than five years 24,746,321 18,286,927 4,275 3,801
30,238,514 24,956,397 48,309 61,959
262
LOLC HOLDINGS PLC
47.3 Litigation against the Group

Litigation is a common occurrence in the finance industry due to the nature of the business undertaken. The Group has formal
controls and policies for managing legal claims. Once professional advice has been obtained and the amount of loss reasonably
estimated, the Group makes adjustments to account for any adverse effects which the claims may have on its financial standing.
At the Reporting date the Group had several unresolved legal claims. The significant unresolved legal claims against the Group for
which legal advisor of the Group is of the opinion that there is possible loss, however there is a probability that the action will not
succeed. Accordingly, no provision for any claims has been made in these Financial Statements.
48 Subsequent events and Re-Classifications

48.1 Subsequent events
No circumstances have arisen subsequent to the reporting date which would require adjustment to or disclosure in the financial
statements other than followings;
Commencement of the Group’s business operations

After a stringent lockdown period of over a two months, curfew has been gradually eased off in many parts of the country. Although
business activity has resumed across the country, and it is encouraging that there is no indication of community spread in the
country at the moment. The Group has evaluated all guidelines issued by the Government as well as international best practices
and each of the Group businesses have developed individual health and safety guidelines to ensure suitable working arrangements
and safe conditions for employees, customers and other stakeholders.
The most recent release by the Government states that curfew restrictions was lifted gradually with effect from 11 May 2020, with
restrictions being eased off during the day for the gradual commencement of economic activities by the public and private sectors.
Although it is too early to make an assessment, the Group has seen a smooth transition with the resumption of business activities
where the Group is already seeing positive momentum. Given the volatile and evolving landscape, the Group will continue to
monitor the impacts on its operations and proactively take measures to ensure the business continues as seamlessly as possible.
Disposal of PRASAC Microfinance Institution Limited

The Group publicly announced the decision of its Board of Directors to sell PRASAC, a 70% owned subsidiary of the Group. With
reference to the corporate disclosure made on 06 January 2020, LOLC International Limited (a subsidiary of LOLC Group) with the
other minority shareholders of PRASAC Microfinance Institution Limited (PRASAC) of Cambodia entered into a Sales and Purchase
Agreement and a shareholder agreement with Kookmin Bank, the largest Commercial Bank of Republic of South Korea, for the
sale of entire shareholding of PRASAC, subject to receiving final approval from the National Bank of Cambodia (NBC) and the
Financial Service Commission of Republic of South Korea. PRASAC is the largest Micro Finance Institution in Cambodia.
On 13 April 2020, the group received the relevant regulatory approval from both National Bank of Cambodia (NBC) and the
Financial Service Commission of Republic of South Korea which considered to be highly substantive for the sale transaction
being highly probable. The sale of PRASAC Microfinance Institution Limited is expected to be completed within a year from the
reporting date. At 31 March 2020, PRASAC Microfinance Institution Limited was classified as a disposal group held for sale and
as a discontinued operation. The business of PRASAC Microfinance Institution Limited represented the Group’s Financial Services
operating segment until 31 March 2020. With PRASAC Microfinance Institution Limited being classified as discontinued operations,
the results of the company has been reclassified under classified as a disposal group held for sale and as a discontinued operation
presented in the segment note. The results of PRASAC for the year are presented in Note 52 to the consolidated financial
statements.
Comparative information
Except for the adoption of new accounting standards and interpretations with effect from 01st April 2019, (refer note 53) and
entities classified as discontinued operations as described into note 52, the Group has consistently applied the accounting policies
with those adopted in the previous financial year. The presentation and classification of the financial statements of the previous
period, have been adjusted, where relevant, for better presentation.
The impact of adopting these new accounting standards and interpretations are disclosed in note 53 to the financial statements.
263
LOLC HOLDINGS PLC
49 Assets pledged
The Group pledges assets that are in its statement of financial position in day to day transaction which are conducted under the
usual terms and conditions applying such agreements. The Group has pledged following assets including right to use assets of
leasehold properties. The details of the pledged securities are given below.
Carrying amount of the assets pledged

Group Company
2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Nature of assets Nature of liability

Foreign currency term deposits Interest bearing loans and 3,879,579 20,149,837 2,628,538 -
borrowings
Lease, hire purchase and loans Term loan/bank drafts/short 30,331,565 25,016,825 16,217 1,358
receivable -term loan/field and processing
developments
Marketable shares and loans Bank overdrafts/term loans/ 34,136,307 33,666,290 34,136,307 33,666,290
investments in field development
Leasehold right Finance lease - 3,542,244 - -
Leasehold property and Term loan 748,382 243,482 209,736 243,482
vehicles
Freehold land & buildings Interest bearing loans and 2,558,945 3,563,703 - -
borrowings
Promissory Notes, Securitised Interest bearing loans and 350,000 409,189 - -
debt certificates, Stock and borrowings
book debts
72,004,778 86,591,570 36,990,798 33,911,130
50 Foreign currency translation

The principal exchange rates used for translation purposes were;
2020 2019
Closing Rate Average Rate Closing Rate Average Rate
United States Dollar USD 188.62 179.47 176.13 168.72

Cambodian Riel KHR 0.0468 0.0441 0.0439 0.0417
Pakistani Rupee PKR 1.1402 1.1656 1.2529 1.3130
Myanmar Kyat MMK 0.1355 0.1197 0.1158 0.1135
Indonesian Rupiah IDR 0.0116 0.0127 0.0124 0.0117
Euro Euro 207.96 200.00 N/A N/A
264
LOLC HOLDINGS PLC
51 Related party disclosures

51.1 Transactions with key management personnel
The Company and the group Carries out transactions in the ordinary course of business with the parties who are defined as related
parties in Sri Lanka Accounting Standard – LKAS 24 (Related Party Disclosures), the details of which are reported below.
Terms and conditions of transactions with related parties

The Group and Company carried out transactions in the ordinary course of business with the following related entities. The list of
Directors at each of the subsidiary, joint venture and associate companies have been disclosed in the Group directory under the
Supplementary Information section of the Annual Report.
Transactions with related parties are carried out in the ordinary course of the business. These transactions carried at arm’s length
basis. Outstanding current account balances at year end are unsecured, interest free and settlement occurs in cash.
Non-recurrent related party transactions

There were no any non-recurrent related party transactions which aggregate value exceeds 10% of the equity or 5% of the
total assets whichever is lower of the Company as per 31 March 2019 audited financial statements, which required additional
disclosures in the 2019/20 Annual Report under Colombo Stock Exchange listing Rule 9.3.2 and Code of Best Practices on
Related Party Transactions under the Security Exchange Commission Directive issued under Section 13 (c)of the Security
Exchange Commission Act.
Recurrent related party transactions

All the transactions which are disclosed under note 49.2.1 with Related Parties which are recurrent, of revenue or trading nature
and which is necessary for day-to-day operations of the company and subsidiaries, in the opinion of the Related Party Transactions
Review Committee, terms for all these transactions are not favourable to the Related Party than those generally available to the
public.
Except the above, there were no any recurrent related party transactions which in aggregate value exceeds 10% of the
consolidated revenue of the Group as per 31 March 2019 audited financial statements, which required additional disclosures
in the 2019/20 Annual Report under Colombo Stock Exchange listing Rule 9.3.2 and Code of Best Practices on Related Party
Transactions under the Security Exchange Commission Directive issued under Section 13 (c) of the Security Exchange Commission
Act.
Transactions with Key Management Personnel (KMP)

According to Sri Lanka Accounting Standard LKAS 24 – ‘Related Party Disclosures’, Key Management Personnel (KMP) are those
persons having authority and responsibility for planning, directing and controlling the activities of the entity directly or indirectly,
including any Director (whether executive or otherwise) of that entity. Accordingly, the Board of Directors, Director/Chief Executive
Officer, Key Employees of the Company holding directorships in subsidiary companies have been classified as Key Management
Personnel (KMP) of the Group.
Close family members are defined as spouse or dependent. Dependent is defined as anyone who depends on the respective
Director for more than 50% of his/her financial needs. Close family members of the KMP are those family members who may be
expected to influence or be influenced by that KMP in their dealings with the entity. They may include KMP’s domestic partner,
children of the KMP’s domestic partner and dependants of the KMP.
As the Company is the Ultimate Parent of its subsidiaries mentioned in Note 31.3 and the Board of Directors of the Company has
the authority and responsibility for planning, directing and controlling the activities of the group, the Directors of the Company and
their immediate family members have been identified as the KMP of the Group.
Therefore, employees of the Company who are Directors of the subsidiary have also been classified as KMP of the subsidiary only.
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LOLC HOLDINGS PLC
Key management personnel compensation

51.1.1 Short term Employment benefits
Group Company
Includes: Rs.'000 Rs.'000 Rs.'000 Rs.'000
Director's emoluments 296,500 275,215 33,709 20,783

Other KMP emoluments and other short term benefits 497,127 971,076 209,982 223,980
793,627 1,246,291 243,691 244,763
51.1.2 Long term employment benefits;

There are no long-term employment benefits paid to the Key Management Personnel during the year.
51.1.3 Other transactions with key management personnel

Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Advances granted during the period 300,734 742,472 - -

Advances settled during the period 356,940 559,194 - -
Property Purchased - 2,347,000
Relevant interest income 30,192 40,952 - -
Balance outstanding 95,429 200,295 - -
Rentals paid 324,205 - - -
Deposits taken during the period 925,155 831,640 - -

Deposits balance 941,923 - - -
Interest paid / charged 121,512 92,493 - -
Interest payable 747 43,590 - -
51.2 Transactions with Related Parties

The Company carries out transactions in the ordinary course of its business with parties who are defined as related parties in Sri
Lanka Accounting Standard 24 “Related Party Disclosures”.
The Group had the following financial dealings during the year 2019/20 with companies which are considered, related parties and
unless otherwise stated, transactions were carried out in the ordinary course of business at commercial rates with companies
mentioned below.
The parties given below are considered related parties mainly due to significant influence arising as a result of common
directorships and through shareholdings. These companies, names of the Directors and the nature of transactions entered into are
listed below.
266
LOLC HOLDINGS PLC
51.2.1 Transactions with subsidiaries, associates and joint-ventures

Company
Subsidiaries
Fund transfers in 101,129,181 108,361,856
Fund transfers out 100,054,261 99,714,358
Expenses shared 5 11,964,959 7,753,835
Asset hire income 248,169 248,169
Interest received on fund transfer 5 3,103,492 2,151,519
Treasury handling charges 5 - 1,050,406
Royalty income 5 488,981 962,562
Franchise fee 5 566 428
Guarantee fee income 40,344 36,565
Rental income 47,400 -
Show back income 303,794 352,182
Secretarial fee - 7,191
Advisory and consultancy services - 21,250
Associates
Repayment of loans and finance leases obtained - 306
Expenses shared 1,192 1,617
Company
Balance outstanding on facilities granted to related parties as at 31 March ‘000 ‘000
Subsidiaries Finance leases and loans granted - 7,998

Associates Finance leases and loans granted - 588,860
- 596,858
Notes 50.3 shows other balances with related parties.
267
LOLC HOLDINGS PLC
Group
Rs.'000 Rs.'000
Associates
Trading transactions
- Sales 41,266 -
- Purchases 2,862,707 -
Interest charged/received 880,104 871,757
Loans Granted 1,390,796 227,897
Repayment of loans and finance leases obtained 1,258,973 229,845
Expenses shared 1,193 -
Commission income received 57,290 56,764
51.2.2 Transactions and balances with other related parties

A number of key management personnel, or their related parties, hold positions in other entities that result in them having control or
significant influence over the financial or operating policies of these entities.
A number of these entities transacted with the Group during the year. The terms and conditions of the transactions with key
management personnel and their related parties were no more favourable than those available, or which might reasonably be
expected to be available, on similar transactions to non-key management personnel related entities on an arm’s length basis.
The transactions related to key management personnel and entities over which they have control were as follows;
Group Company
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Loans obtained 3,222,495 39,990,643 - -

Supply of leased vehicles 162,730 134,121 - -
Rental collections 240,015 10,228 - -
Interest income 270,000 10,199 - -
Deposits held with the company 264,230 294,892 - -
Settlement of loans obtained (4,696,615) (53,081,361) - -
Interest paid on loans (192,073) (228,101) (76,254) -
Interest received on loans given 210,078 253,902 (925,178) -
Balances payable on
- Loans obtained 630,653 2,662,573 908,400 -
- Interest payable 173,172 26,679 24,967
Balances receivable on loans granted 1,500,000 2,744,890 5,427,173 -
268
LOLC HOLDINGS PLC
51.3 Balances with Related Parties

51.3.1 Amounts due from related parties
Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Subsidiaries
Ajax Engineers (Private) Limited - - 28,100 -
B G Air Services (Private) Limited - - 14,751 10,864
BI Commodities & Logistics (Private) Limited - - 11,481 7,467
B Commodities (Private) Limited - - 192,288 -
Boduaru Beach Resorts (Private) Limited - - - 5
Brown and Company PLC - - 111,823 78,106
Browns ARI Resort - - 409 -
Browns RAA Resort Ltd - - 425 -
Browns Engineering & Construction (Private) Limited - - 131,953 4,446
Browns Global Farm Pvt Ltd - - 2,448 1,382
Browns Leisure (Private) Limited - - 1,219 22
Browns Hotel and Resorts Limited - - 861,852 139,661
Browns Healthcare Ltd - - 5,496 3,152
Browns Holding Ltd - - 24 8
Browns Investments PLC - - 11,091,262 4,443,551
Browns Tours Pvt Ltd. - - 7,277 2,804
Ceylon Graphene Technologies (Private) Limited - - 20,922 2,798
Commercial Factors (Pvt) Ltd - - 91 -
Commercial Leasing & Finance PLC - - 44,291 99,194
Creations Constructions Engineering (Pvt) Ltd - - 20,117 -
Dikwella Resort Limited - - 922,174 764,499
Diriya Investments (Private) Limited - - 252 238
Eagle Recoveries (Pvt) Ltd - - 281 3
East Coast Land Holdings (Private) Limited - - 3,150 2,477
Eden Hotels Lanka PLC - - 378,164 112,589
Excel Restaurant (Private) Limited - - 22,989 4,676
I Pay (Pvt) Ltd - - 25,877 -
Green Orchard Property Investments Limited - - 572 7,243
Green Paradise Resorts (Private) Limited - - 11,963 11,991
Gurind Accor (Private) Limited - - 8,924 3,122
LOLC Advance Technologies (Pvt) Ltd - - 58,965 -
LOLC Capital One (Private) Limited - - 189 8
LOLC Corporate Services (Private) Limited - - 52,969 46,914
LOLC Development Finance PLC - - 2,645,338 46,687
LOLC Factors Limited - - 9,091,053 5,849,360
LOLC Finance PLC - - 654,801 698,769
269
LOLC HOLDINGS PLC
Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
LOLC Financial Sector Holdings - - 3,207 -

LOLC General Insurance Limited - - 28,083 -
LOLC GEO Technologies (Pvt) Ltd - - 19,377 -
LOLC Investments Limited - - 148,416 -
LOLC Life Assurance Limited - - - 52,686
LOLC Myanmar Micro-Finance Company Limited - - 19,402 19,402
LOLC PROPERTY 1 - - 12,693 458
LOLC PROPERTY 2 - - 167 84
LOLC Pvt Ltd - - 3,007 -
LOLC Securities Limited - - 431,783 201,705
LOLC Serendib (Pvt) Ltd - - 18,308 -
LOLC Technologies Limited - - 17,968 2,378
Maturata Plantations Limited - - 14,562 1,553
Millennium Development Limited - - 56,430 8,376
PALM Garden Hotels PLC - - 1,186,825 1,011,203
Riverina Resort (Private) Limited - - 3,465,301 2,956,959
Speed Italia Limited - - 43,615 17
Sun & Fun Resorts (Private) Limited - - 71,244 35,930
Sundaya Lanka (Private) Limited - - 147 77
Tropical Villas (Private) Limited - - 23 8
United Dendro Energy (Private) Limited - - 24,312 24,250
270
LOLC HOLDINGS PLC
Group Company
As at 31 March 2020 2019 2020 2019
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Associates
Associates Battery Manufactures (Ceylon) Limited 996 15,681 - -
Galoya Plantations Limited 732,997 714,522 4,531 5,371
Sierra Construction (Private) Limited 6,224 4,738 - -
Taprobane Plantations (Private) Limited 96,079 106,582 493 239
NPH Development Limited 190,531 179,365 - -
Patronus Wealth Holdings Limited 218,963 - -
Sunbird Bio-energy SL Ltd - 2,700,549 - -
INK Investments (Pvt) Ltd 732,816 300,000 - -
Don & Don Holdings Ltd 566,542 - -
Browns Health Care (Private) Limited 6,913 - -
(-) Allowance for impairment 51.3.1.1 - - (44,931) (44,931)
2,552,061 4,021,438 31,973,061 16,618,328
51.3.1.1 Allowance of impairment

Group Company
As at 31 March 2020 2019 2020 2019
Rs. '000 Rs. '000 Rs. '000 Rs. '000
Speed Italia Limited - - 44,931 44,931

- - 44,931 44,931
51.3.1.1 Movement in allowance of impairment

Group Company
Rs. '000 Rs. '000 Rs. '000 Rs. '000
Opening balance - - 44,931 44,931

Closing balance - - 44,931 44,931
271
LOLC HOLDINGS PLC
51.3.2 Amounts due to related parties

Group Company
As at 31 March 2020 2019 2020 2019
Rs. '000 Rs. '000 Rs. '000 Rs. '000
Subsidiaries
Browns Properties Pvt Ltd - - 3,494 3,720
LOLC Technology Services Limited - - 254,370 414,767
LOLC Advance Technologies (Pvt) Ltd - - - 1,641
LOLC Asset Holdings Limited - - 19,600 19,823
LOLC Eco Solutions Limited - - 3,871 4,182
LOLC Investments Limited - - - 90,532
LOLC Life Assurance Limited - - 2,870 -
LOLC Micro Investments Limited - - - 179,183
LOLC Motors Limited - - 244,440 144,234
LOLC Property 5 - - 301 378
Prospere Reality Limited - - 374,452 374,524
Associates
Taprobane Plantations (Private) Limited - 3,230 - -
Other related Parties

Don & Don Holdings Ltd 3,376,862 2,785,328 - -
Ishara Traders (Private) Limited - 769,828 - -
INK Investments (Pvt) Ltd 254,642 - - -
3,631,504 3,558,386 903,398 1,232,985
52 Non-Current assets held for sale and Discontinued Operations

1 PRASAC Microfinance Institution Limited
The Group publicly announced the decision of its Board of Directors to sell PRASAC, a 70% owned subsidiary of the Group. With
reference to the corporate disclosure made on 06 January 2020, LOLC International Limited (a subsidiary of LOLC Group) with the
other minority shareholders of PRASAC Microfinance Institution Limited (PRASAC) of Cambodia entered into a Sales and Purchase
Agreement and a shareholder agreement with Kookmin Bank, the largest Commercial Bank of Republic of South Korea, for the
sale of entire shareholding of PRASAC, subject to receiving final approval from the National Bank of Cambodia (NBC) and the
Financial Service Commission of Republic of South Korea. PRASAC is the largest Micro Finance Institution in Cambodia.
On 13 April 2020, the group received the relevant regulatory approval from both National Bank of Cambodia (NBC) and the
Financial Service Commission of Republic of South Korea which considered to be highly substantive for the sale transaction
being highly probable. The sale of PRASAC Microfinance Institution Limited is expected to be completed within a year from the
reporting date. At 31 March 2020, PRASAC Microfinance Institution Limited was classified as a disposal group held for sale and
as a discontinued operation. The business of PRASAC Microfinance Institution Limited represented the Group’s Financial Services
operating segment until 31 March 2020. With PRASAC Microfinance Institution Limited being classified as discontinued operations,
the results of the company has been reclassified under classified as a disposal group held for sale and as a discontinued operation
presented in the segment note. The results of PRASAC for the year are presented below:
272
LOLC HOLDINGS PLC
2 Browns Global Farm (Pvt) Ltd

Browns Global Farm (Pvt) Ltd is a subsidiary of LOLC Group which carries the business of cultivating and selling Banana & Mango.
Due to issues of the production business operations were suspended temporary and there were no revenue since June 2019.
After forecasting future viability Company was considering to permanently discontinue the operation until this COVID 19 pandemic
occurs. The said process cannot completed due to COVID 19 pandemic and the premises was handover to SL army to look after
until the issue was sorted.
Consequently, the corresponding operating results up to the point of disposal together with the profit on disposal of the company
have been classified and reported as a Discontinued Operation in accordance with the requirements of the Sri Lanka Financial
Reporting Standards (SLFRS).
2020 2019
PRASAC BGFL PRASAC BGFL
Rs. '000 Rs. '000 Rs. '000 Rs. '000
Gross income
Interest income 67,190,564 - 49,424,583 -
Interest expenses (32,018,026) (5) (22,477,682) (8,538)
Net interest income 35,172,538 (5) 26,946,901 (8,538)
Revenue - 5,525 - 27,620

Less: cost of sales - (8,621) - (39,000)
Gross profit - (3,096) - (11,380)
Income 4,287,568 - 2,946,708 -

Other income/(expenses) 1,450,009 - 1,335,394 -
Profit before operating expenses 40,910,115 (3,101) 31,229,003 (19,918)
Operating expenses
Direct expenses excluding finance expenses - (793) (14,016) -
Personnel expenses (11,511,830) (1,607) (7,980,183) (4,957)
Net impairment loss on financial assets (2,124,468) - (2,594,722) -
Depreciation and amortisation (1,115,775) (9,773) (415,890) (13,106)
Other operating expenses (2,346,418) (47,314) (2,915,353) (2,886)
Results from operating activities 23,811,624 (62,588) 17,308,839 (40,867)
Income tax expense (4,769,546) - (3,564,958) -
Profit for the year 19,042,078 (62,588) 13,743,881 (40,867)
273
LOLC HOLDINGS PLC
The major classes of assets and liabilities of disposal group held for sale and as a discontinued operations as at 31 March are, as
follows:
2020
PRASAC BGFL
Rs. '000 Rs. '000
Assets
Cash in hand and favourable bank balances 101,650,233 385
Investment securities 5,313 -
Financial assets at amortised cost/ Advances and other loans 507,987,226 -
Inventories - 757
Current tax assets - -
Trade and other current assets 1,709,225 1,063
Right-of-use assets 2,781,861 971
Deferred tax assets 1,691,577 -
Intangible assets 13,206,413 -
Property, plant and equipment 1,018,799 58,023
Assets directly associated with the assets held for sale and discontinued operations 630,050,645 61,200
Liabilities
Bank overdrafts - 221
Financial Liabilities at Amortised Cost/ Deposits liabilities 342,957,338 -
Financial Liabilities at Amortised Cost/ Interest bearing borrowings 176,649,632 -
Current tax payables 1,527,014 -
Trade and other payables 12,601,392 22,399
Retirement benefit obligations 179,937 49
Liabilities directly associated with the assets held for sale and discontinued operations 533,915,312 22,670
2020 2019
PRASAC BGFL PRASAC BGFL
Rs. '000 Rs. '000 Rs. '000 Rs. '000
Operating 4,658,192 17,917 (14,288,238) (133,276)

Investing (177,039) (17,099) (98,371) (7,376)
Financing 23,658,165 (157) 2,129,618 138,708
Net cash (outflow)/inflow 28,139,317 661 (12,256,991) (1,945)
Earnings per share

Basic, profit from discontinued operations attributable to 40.07 (0.13) 28.92 (0.09)
Diluted, profit from discontinued operations attributable to 40.07 (0.13) 28.92 (0.09)
274
LOLC HOLDINGS PLC
Write-down of property, plant and equipment

Immediately before the classification of entities as discontinued operations, the recoverable amount was estimated for certain items
of property, plant and equipment and no impairment loss was identified. As at 31 March 2020, there was no further write-down as
the carrying amount of the disposal group did not fall below its fair value less costs to sell.
53 New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 31 March 2019,
except for the adoption of new standards effective as of 1 April 2019. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet effective.
53.1 SLFRS 16 – Leases

The Group applies, for the first time, SLFRS 16 Leases. As required by LKAS 34, the nature and effect of these changes are
disclosed below.
SLFRS 16 supersedes LKAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating
Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out
the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases
under a single on-balance sheet model. The Group has adopted SLFRS 16 using modified retrospective method from 1 April
2019, without restating comparatives for the 2018/19 reporting period, as permitted under the specific transitional provisions in the
standard.
Lessor accounting under SLFRS 16 is substantially unchanged from under LKAS 17. Lessors will continue to classify leases as
either operating or finance leases using similar principles as in LKAS 17. Therefore, SLFRS 16 does not have an impact for leases
where the Group is the lessor.
On adoption of SLFRS 16, the Company and the Group recognised right-of-use assets and lease liabilities in relation to leases
which had previously been classified as ‘operating leases’ under the principles of LKAS 17, ‘Leases’.
The effect of adoption SLFRS 16 as at 1 April 2019 is as follows
Group Company
In LKR’000 In LKR’000
Assets
Recognition on initial application of SLFRS 16 - Leases 10,099,941 669,495
Transferred from prepayments 144,277 64,790
Transferred from lease equalisation (858,056) -
Transferred from leasehold properties (note 26) 2,422,821 -
Total assets 11,808,983 734,285
Liabilities
Interest-bearing loans and borrowings/Operating Lease Liability 9,208,526 669,495
Trade and other payables 2,814,001 -
Total liabilities 12,022,527 669,495
Net Impact to the Equity (213,544) -
275
LOLC HOLDINGS PLC
a) Nature of the effect of adoption of SLFRS 16

The Group has lease contracts for various items such as lands, offices, warehouses and vehicles. Property leases are the major
asset included in the right of use assets category, typically for in between 3 to 99 years of lease term and have extension options.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. On adoption of
SLFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’
under the principles of LKAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments,
discounted using the Group’s incremental borrowing rate as of the transition date.
Leases previously classified as finance leases

For leases previously classified as finance leases, the entity recognised the carrying amount of the lease asset and lease liability
immediately before transition as the carrying amount of the right of use asset and the lease liability at the date of initial application.
The requirements of SLFRS 16 was applied to these leases from 1 April 2019.
Leases previously accounted for as operating leases

The Group recognised right of use assets and lease liabilities for those leases previously classified as operating leases, except
for short-term leases and leases of low-value assets. The right of use assets for most leases were recognised based on the
carrying amount as if the standard had always been applied, apart from the use of incremental borrowing rate at the date of initial
application. Lease liabilities were recognised based on the present value of the remaining lease payments, discounted using the
incremental borrowing rate at the date of initial application.
b) Summary of new accounting policies and impact

Set out below are the new accounting policies of the Group upon adoption of SLFRS 16, which have been applied from the date of
initial application:
(i) Right of use assets

The Group recognises right of use assets when the underlying asset is available for use. Right of use assets are measured at cost,
less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of
right of use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or
before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of
the leased asset at the end of the lease term, the recognised right of use assets are depreciated on a straight-line basis over the
shorter of its estimated useful life or the lease term. Right of use assets are subject to impairment.
Right-of-use assets are recognised at cost comprising the following:
- the amount of the initial measurement of lease liability

- any lease payments made at or before the commencement date less any lease incentives received
- any initial direct costs, and
- restoration costs.
The opening adjustment as at 1 April 2019, represents the carrying value of the right-of-use assets relating to ongoing lease
contracts measured on a modified retrospective basis as if the agreement had been applied since 01 April 2019.
(ii) Lease liabilities

At the initial application date of the standard (01 April 2019), the Group recognises lease liabilities measured at the present
value of lease payments to be made over the lease term. In calculating the present value of lease payments, the Group uses the
incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After
the initial application date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease
term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
276
LOLC HOLDINGS PLC
The opening adjustment as at 1 April 2019, represents the present value of the remaining lease payments, relating to ongoing lease
contracts, discounted using the lessee’s incremental borrowing rate as of 1 April 2019.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to leases that have a lease term of 12 months or less from the
commencement date. It also applies the lease of low-value assets recognition exemption to leases of office equipment that are
considered of low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a
straight-line basis over the lease term.
(iii) Reserves
The following is a summary of transition adjustments to the Company’s and the Group’s retained earnings from the initial application
of SLFRS 16 as at 1 April 2019.
Group Company
In LKR’000 In LKR’000
Retained earnings as at 31st March 2019

Recognition of additional lease liabilities (227,077) -
Impact due to Deferred Tax adjustment 13,533 -
Adjustments to retained earnings from changes in accounting policies (213,544) -
Retained earnings as at 1st April 2019 (213,544) -
Practical expedients applied

In applying SLFRS 16 for the first time, the Company and the Group has used the following practical expedients permitted by the
standard:
- the use of a single discount rate to a portfolio of leases with reasonably similar characteristics
- reliance on previous assessments on whether leases are onerous
- the accounting for operating leases with a remaining lease term of less than 12 months as at 1 April 2019 as short-term leases,
and
- apply the Standard to contracts that were previously identified as leases applying LKAS 17, ‘Leases’ and IFRIC 4, ‘Determining
whether an Arrangement contains a Lease’.
277
LOLC HOLDINGS PLC
54 Assets and Liabilities Measured at Fair Value and Fair Value Hierarchy
54.1 Fair value hierarchy
The Group’s accounting policy on fair value measurements is discussed in accounting policy 3.3
The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the
measurements.
1 Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.
When available, the Group measures the fair value of an instrument using active quoted prices or dealer price quotations
(assets and long positions are measured at a bid price; liabilities and short positions are measured at an ask price), without
any deduction for transaction costs. A market is regarded as active if transactions for asset or liability take place with sufficient
frequency and volume to provide pricing information on an ongoing basis.
2 Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This
category includes instruments valued using:
a) quoted market prices in active markets for similar instruments;

b) quoted prices for identical or similar instruments in markets that are considered less than active; or
c) other valuation techniques where all significant inputs are directly or indirectly observable from market data.
3 Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation
technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s
valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant
unobservable adjustments or assumptions are required to reflect differences between the instruments
Valuation techniques include net present value and discounted cash flow models comparison with similar instruments for which
observable market prices exist, option pricing models and other valuation models.
Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, risk premiums in estimating
discount rates, bond and equity prices, foreign exchange rates, expected price volatilities and corrections.
Observable prices or model inputs such as market interest rates are usually available in the market for listed equity securities and
government securities such as treasury bills and bonds. Availability of observable prices and model inputs reduces the need for
management judgement and estimation while reducing uncertainty associated in determining the fair values.
Models are adjusted to reflect the spread for bid and ask prices to reelect costs to close out positions, credit and debit valuation
adjustments, liquidity spread and limitations in the models. Also, profit or loss calculated when such financial instruments are first
recorded (‘Day 1’ profit or loss) is deferred and recognised only when the inputs become observable or on derecognition of the
instrument.
The following table provides an analysis of assets and liabilities measured at fair value as at the Reporting date, by the level in the
fair value hierarchy into which the fair value measurement is categorised. These amounts were based on the values recognised in
the Statement of Financial Position.
There were no material transfers between levels of fair value hierarchy during 2019 and 2020.
The independent valuers provide the fair value of land and buildings once in three years according to the Group’s policy. Therefore
the fair value exist in the recent valuation which was carried out by professionally qualified independent valuers in compliance with
Sri Lanka Accounting Standards - SLFRS 13 (Fair Value Measurement) less subsequent accumulated depreciation and impairment
losses is considered as the fair value exist as at the reporting date (31st March 2020).
In determining the fair value, highest and best use of the property has been considered including the current condition of the
properties, future usability and associated redevelopment requirements have been considered. Also, the valuers have made
reference to market evidence of transaction prices for similar properties, with appropriate adjustments for size and location. The
appraised fair values are rounded within the range of values.
278
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As at 31st March 2020

Level 1 Level 2 Level 3 Total
Quoted prices in Significant Significant
active markets observable un-observable
inputs inputs
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Group
Financial Assets
Trading assets - fair value through profit or loss
Corporate securities 18.1 4,694,045 - - 4,694,045
Government securities 18.2 - 8,043 - 8,043
Equity securities 18.3 388,796 1,167,863 - 1,556,659
Derivative assets held for risk management 18.4 - 380,328 - 380,328
5,082,841 1,556,234 - 6,639,075
Financial assets measured at fair value through other
Corporate securities 19.1.1 3,245,240 - - 3,245,240
Government securities 19.1.2 - 17,194,717 - 17,194,717
Designated FVOCI investment securities 19.1.3 - - 244,938 244,938
Equity securities with readily determinable fair values 19.1.4 - 223,278 - 223,278
3,245,240 17,417,995 244,938 20,908,173
Total financial assets at fair value 8,328,081 18,974,229 244,938 27,547,248
Non-Financial Assets
Investment Properties 28 - - 31,723,414 31,723,414
Consumable biological assets 29 - - 3,642,998 3,642,998
Property, plant & equipment
- Land 35 - - 22,731,610 22,731,610
- Buildings (Leasehold & Freehold) 35 - - 12,959,246 12,959,246
Total non-financial assets at fair value - - 71,057,268 71,057,268
Total assets at fair value 8,328,081 18,974,229 71,302,206 98,604,516
Financial Liabilities
Derivative financial liabilities 36 - 114,349 - 114,349
Total liabilities at fair value - 114,349 - 114,349
279
LOLC HOLDINGS PLC

inputs inputs
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Group
Financial Assets
Corporate securities 18.1 5,685,239 - - 5,685,239
Government securities 18.2 - 9,009 - 9,009
Equity securities 18.3 423,349 1,271,602 - 1,694,950
Derivative assets held for risk management 18.4 - 879,882 - 879,882
6,108,588 2,160,493 - 8,269,081
Corporate securities 19.1.1 3,756,210 - - 3,756,210
Government securities 19.1.2 - 12,384,716 - 12,384,716
Designated FVOCI investment securities 19.1.3 174,436 - - 174,436
Equity securities with readily determinable fair values 19.1.4 223,288 - - 223,288
4,153,934 12,384,716 - 16,538,650
Total financial assets at fair value 10,262,522 14,545,209 - 24,807,730
Consumable biological assets 28 - - 3,788,540 3,788,540
- Land 35 - - 21,006,071 21,006,071
- Buildings (Leasehold & Freehold) 35 - - 7,792,466 7,792,466
Total assets at fair value 10,262,522 14,545,209 58,970,451 83,778,182
Derivative financial liabilities - 841,492 - 841,492
Total liabilities at fair value - 841,492 - 841,492
280
LOLC HOLDINGS PLC

inputs inputs
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Company
Financial Assets
Equity securities 18.3 263,429 - - 263,429
263,429 - - 263,429
Corporate securities 19.1.1 - 273 - 273
Equity securities with readily determinable fair values 19.1.4 - 223,278 - 223,278
- 223,551 98,265 321,816
Total financial assets at fair value 263,429 223,551 98,265 585,245
- Land 35 - - 2,146,500 2,146,500
- Buildings 35 - - 423,260 423,260
Total assets at fair value 263,429 223,551 3,685,275 4,172,255
281
LOLC HOLDINGS PLC

inputs inputs
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000
Financial Assets
Equity securities 18.3 285,735 - - 285,735
285,735 - - 285,735
Corporate securities 19.1.1
Government securities 19.1.2 - 390 - 390
Equity securities with readily determinable fair values 19.1.4 223,278 - - 223,278
223,278 390 70,765 294,433
Total financial assets at fair value 509,013 390 70,765 580,167
Investment Properties 28 - - 956,125 956,125
- Land 35 - - 2,906,500 2,906,500
- Buildings 35 - - 437,522 437,522
Total assets at fair value 509,013 390 4,370,912 4,880,314
282
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54.2 Financial instruments not measured at fair value

The following table sets out the fair values of financial instruments not measured at fair value and analyses them by the level in the
fair value hierarchy into which each fair value measurement is categorised.
2020 2019
Carrying Fair Value Carrying Fair Value
amount amount
Note Rs. '000 Rs. '000 Rs. '000 Rs. '000
Group
Financial Assets
Financial assets at amortised cost/ Finance lease 20 58,101,502 59,386,780 56,231,759 55,982,729
Financial assets at amortised cost/ Advances and 21 331,358,633 341,134,574 651,045,840 646,761,242
other loans
417,841,848 429,002,403 784,399,500 779,293,059
Financial liabilities at amortised cost/ Deposits 37.1 220,985,129 216,852,707 452,075,041 452,201,129
liabilities
borrowings
544,012,212 535,861,656 829,501,282 828,922,603
Company
Financial Assets
Financial assets at amortised cost/ Finance lease 20 2,440 2,538 3,287 3,287
Financial assets at amortised cost/ Advances and 21 5,510,840 5,442,785 2,483,657 2,366,428
other loans
8,453,325 8,532,370 6,211,586 6,094,122
borrowings
95,412,795 94,057,731 69,895,035 69,949,553
For the cash and cash equivalents, short term receivables and payables, the fair value reasonably approximates its costs.
There are various limitations inherent on this fair value disclosure particularly where prices may not represent the underlying value
due to dislocation in the market. Not all the Group’s financial instruments can be exchanged in an active market. The Group obtains
the fair values for investment securities from quoted market prices where available. Where securities are unlisted and quoted
prices are not available, the Group obtains fair values, by means of discounted cash flows and other valuation techniques that are
commonly used by market participants. These techniques address factors such as interest rates, credit risk and liquidity.
The following table sets out the fair values of financial instruments not measured at fair value and analyses them by the level in the
fair value hierarchy in to which each fair value measurement is categorised.
283
LOLC HOLDINGS PLC
Group
inputs inputs
Rs.'000 Rs.'000 Rs.'000 Rs.'000
As at 31 March 2020
Financial assets
Financial assets at amortised cost - 28,481,049 - 28,481,049
Financial assets at amortised cost/ Finance lease receivables, - - 59,386,780 59,386,780
hire purchases and operating leases
Financial assets at amortised cost/ Advances and other loans - - 341,134,574 341,134,574
- 28,481,049 400,521,354 429,002,403
Financial liabilities
Financial liabilities at amortised cost/ Deposits liabilities - - 216,852,707 216,852,707
Financial liabilities at amortised cost/ Interest bearing - - 319,008,949 319,008,949
borrowings
- - 535,861,656 535,861,656
As at 31 March 2019
Financial assets
Financial assets at amortised cost/ Finance lease receivables, - - 55,982,729 55,982,729
- 76,549,088 702,743,971 779,293,059
Financial liabilities at amortised cost/ Deposits liabilities - - 452,201,129 452,201,129
borrowings
- - 828,922,603 828,922,603
284
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Company
inputs inputs
Rs.'000 Rs.'000 Rs.'000 Rs.'000
As at 31 March 2020
Financial assets
Financial assets at amortised cost/ Finance lease receivables, - - 2,538 2,538
- 3,087,047 5,445,323 8,532,370
borrowings
- - 94,057,731 94,057,731
As at 31 March 2019
Financial assets
Financial assets at amortised cost/ Finance lease receivables, - - 3,287 3,287
- 3,724,642 6,094,122 6,094,122
borrowings
- - 69,895,035 69,949,553
54.3 Assets measured at level 3

The following table shows a reconciliation from the beginning balances to the ending balances of fair value measurements in Level
3 of the fair value hierarchy.
Note 35.2 provides information on significant unobservable inputs used as at 31 March, 2020 in measuring fair value of land and
buildings categorised as Level 3 in the fair value hierarchy.
Note 35.2 provides details of valuation techniques used and sensitivity of fair value measurement to changes in significant
unobservable inputs.
285
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Freehold Land and Buildings

Group Company
Rs. '000 Rs. '000
Balance as at 1 April 2018 27,615,635 3,358,284

Additions 1,866,757 -
Revaluations 2,160,982 -
Disposals / deductions (2,634,620) -
Acquisition of subsidiaries 7,035 -
Exchange differences 24,617 -
Depreciation of buildings (241,869) (14,262)
Balance as at 31 March 2019 28,798,537 3,344,022
Additions 218,177 -
Revaluations 1,129,020 -
Disposals / deductions 6,480,137 -
Acquisition of subsidiaries 1,103,393 -
Exchange differences 47,653 -
Disposal of Subsidiaries (1,060,228) -
Impairment (760,000) (760,000)
Depreciation of buildings (265,833) (14,262)
Balance as at 31 March 2020 35,690,856 2,569,760
55 Analysis of financial instruments by measurement basis

Financial instruments are measured on an on-going basis either at fair value or at amortised cost. The Accounting Policies describe
how each category of financial instrument is measured and how income and expenses, including fair value gain and losses, are
recognised. The following table analyses the carrying amounts of the financial instruments by category as defined in Sri Lanka
Accounting Standards – SLFRS )9 (Financial Instruments: Recognition & Measurement) under headings of the Statement of
Financial Position for both financial year 2019 and 2020.
286
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Group
Fair value Fair value Amortised Other Total Fair value
through through cost financial carrying
profit or loss OCI assets/ amount
liabilities
Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.’000 Rs.'000
As at 31 March 2020
Financial assets
Cash in hand and favourable bank - - 56,135,056 - 56,135,056 56,135,056
balances
Trading assets - fair value through profit 6,639,075 - - - 6,639,075 6,639,075
or loss
Investment securities - 20,908,173 28,381,713 49,289,886 49,389,222
Financial assets at amortised cost/ - - 58,101,502 - 58,101,502 59,386,780
Finance lease receivables, hire purchases
and operating leases
Financial assets at amortised cost/ - - 331,358,633 - 331,358,633 341,134,574
Advances and other loans
Trade and other current assets - - - 11,900,266 11,900,266 16,012,795
Total financial assets 6,639,075 20,908,173 473,976,904 11,900,266 513,424,418 528,697,502
Bank overdrafts - 4,022,416 - 4,022,416 4,022,416
Trading liabilities - fair value through profit 114,349 - - - 114,349 114,349
or loss
Financial liabilities at amortised cost/ - - 220,985,129 - 220,985,129 219,852,707
Deposits liabilities
Interest bearing borrowings
Trade and other payables - - 12,924,406 - 12,924,406 12,924,406
Total financial liabilities 114,349 - 560,959,034 - 561,073,383 552,922,827
287
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Group
liabilities
Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.’000 Rs.'000
As at 31 March 2019
Financial assets
Cash in hand and favourable bank - 76,082,984 - 76,082,984 76,082,984
balances
Trading assets - fair value through profit 8,269,081 - - - 8,269,081 8,269,081
or loss
Investment securities - 16,538,650 77,121,901 93,660,551 93,087,738
Financial assets at amortised cost/ - 56,231,759 - 56,231,759 55,982,729
Trade and other current assets - 16,957,713 16,957,713 16,957,713
Total financial assets 8,269,081 16,538,650 860,482,485 16,957,713 902,247,928 897,141,487
Bank overdrafts - 10,508,019 - 10,508,019 10,508,019
Trading liabilities - fair value through profit 841,492 - - - 841,492 841,492
or loss
Trade and other payables - - - 25,883,963 25,883,963 25,883,963
Total financial liabilities 841,492 - 840,009,301 25,883,963 866,734,756 866,156,076
288
LOLC HOLDINGS PLC
Analysis of Financial Instruments by Measurement Basis

Company
liabilities
Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.’000 Rs.'000
As at 31 March 2020
Financial assets
Cash in hand and favourable bank - 1,611,459 - 1,611,459 1,611,459
balances
Trading assets - fair value through profit 263,429 - - - 263,429 263,429
or loss
Investment securities - 321,816 2,940,045 - 3,261,861 3,408,863
Financial assets at amortised cost/ - 2,440 - 2,440 2,538
Trade and other current assets - - - -
- - 32,680,989 32,680,989 32,680,989
Total financial assets 263,429 321,816 10,064,784 32,680,989 43,331,018 40,450,935
Bank overdrafts - 1,039,522 - 1,039,522 1,039,522
Trading liabilities - fair value through profit - - - - -
or loss
Financial liabilities at amortised cost/ - - - 1,329,893 1,329,893 1,329,893
Total financial liabilities - - 96,452,317 1,329,893 97,782,210 96,427,146
289
LOLC HOLDINGS PLC
Analysis of Financial Instruments by Measurement Basis

Company
liabilities
Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.’000 Rs.'000
As at 31 March 2019
Financial assets
Cash in hand and favourable bank - - 945,468 - 945,468 945,468
balances
Trading assets - fair value through profit 285,735 - - - 285,735 285,735
or loss
Investment securities - 294,433 3,724,642 4,019,075 4,018,840
Financial assets at amortised cost/ - 3,287 - 3,287 3,287
Trade and other current assets - - 17,304,653 17,304,653 17,304,653
Total financial assets 285,735 294,433 7,157,055 17,304,653 25,041,875 24,924,411
Bank overdrafts - - 3,629,017 - 3,629,017 3,629,017
Trade and other payables - - - 8,361,982 8,361,982 8,361,982
Total financial liabilities - - 75,229,098 8,361,982 83,591,080 83,645,598
55.1 Valuation Methodologies and Assumptions

Fair value of financial assets and liabilities not carried at fair value
Relief granted by the CBSL has not being considered for the fair value.
The valuation techniques used to establish the Group’s fair values are consistent with those used to calculate the fair values of
financial instruments carried at fair value. The fair values calculated are for disclosure purposes only and do not have any impact
on the Group’s reported financial performance or position. The fair values calculated by the Group may be different from the
actual amount that will be received/paid on the settlement or maturity of the financial instrument. As certain categories of financial
instruments are not traded there is a significant level of management judgment involved in calculating the fair values.
The following describes the methodologies and assumptions used to determine fair values for those financial instruments which are
not already recorded at fair value in the Financial Statements:
290
LOLC HOLDINGS PLC
Balances with banks and financial institutions

For financial assets and financial liabilities that have a short-term maturity (less than three months) it is assumed that the carrying
amounts approximate their fair value. This assumption is also applied to demand deposits, and savings accounts without a specific
maturity.
Loans and receivables

The fair value of loans and advances to customers with a maturity of less than one year generally approximates the carrying value,
subject to any significant movement in credit spreads. The estimated fair value of loans and advances with maturity of more than
one year represents the discounted amount of future cash flows expected to be received. Expected cash flows are discounted at
current market rates to determine fair value.
Due to customers
The estimated fair value of deposits with no maturity period (savings deposits) is the amount repayable on demand. The estimated
fair value of fixed interest-bearing deposits (fixed deposits) without quoted market prices is based on discounting cash flows using
the prevailing market rates for debts with a similar risk and remaining maturity.
Due to banks and debt securities issued

Variable rate is a fair measure which reflects market movements. Hence the carrying value represents the fair value of the variable
rate instruments.
The fair value of fixed rate borrowings with a maturity of less than one year generally approximates the carrying value, subject to
any significant movement in credit spreads. The estimated fair value of fixed rates borrowing with maturity of more than one year
represents the discounted amount of future cash flows expected to be paid. Expected cash flows are discounted at current market
rates to determine fair value.
Other Financial Liabilities

Since all the liabilities which are under other financial liabilities have short-term maturities, it is assumed that the carrying amount of
those liabilities approximate their fair value.
Land and Buildings and Investment Properties

Land in Property, plant and Equipment and Investment Property are valued using market approach with direct comparison method,
making adjustments for points of difference to derive the fair value. Buildings in Land and Buildings and Investment Property are
valued using contractors methods
Under the Market Approach, estimated fair value would get increased/(decreased) if;
- Price per perch would get higher/(lower)
- Price per square foot would get higher/(lower)
- Depreciation rate for building would get lower/(higher)
Fair value measurement and related fair value disclosures

Due to the COVID-19 outbreak and the closure of the exchange, Management has assessed and determined the fair value of
equity portfolio as of 31 March 2020, based on the closing traded prices that existed as of 31 January 2020.
All the listed equity instruments were transferred from level 1 to level 2 as at 31 March 2020 as it shows factors which are indicative
of an inactive market due to COVID 19 pandemic. There was a significant decline in the world equity market and the share prices
did not reflect the accurate fair value of the instrument. Hence management decided to recognise all its listed equity instruments in
level 2.
All the other financial instruments were properly categorised and during the period were not materially different from the transaction
prices at the date of initial recognition. The fair value changes on financial instruments in Level 3 category was properly recorded in
the statement of other comprehensive income Fair valuation was done as of 31 March 2020.
291
LOLC HOLDINGS PLC
56 Maturity analysis of financial assets and liabilities

56.1 Maturity analysis of financial assets
As at 31 March 2020 Carrying less than one 1-3 months 4-12 months 13-60 months > 60 months
amount month
Note Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.’000
Group
Cash and cash equivalents 17.1 56,135,056 54,154,573 1,451,169 529,314 - -
Trading assets - fair value through
profit or loss
Corporate securities 18.1 4,694,045 1,652,517 1,998,841 1,042,687 - -
Government securities 18.2 8,043 8,043 - - - -
Equity securities 18.3 1,556,659 - 1,556,659 - - -
Derivative assets held for risk 18.4 380,328 121,582 178,711 80,035 - -
management
Financial assets measured at fair value 19.1 20,908,173 3,234,739 1,399,307 5,199,389 5,869,956 5,204,781
Financial assets at amortised cost 19.2 28,381,713 6,862,644 7,921,057 8,285,423 5,126,666 185,922
Financial assets at amortised cost/
Finance lease receivables, hire
purchases and operating leases
Finance lease receivables 20.1 58,099,062 9,014,236 17,160,681 18,409,476 13,389,915 124,755
Operating lease receivables 20.2 2,440 - 2,440 - - -
Advances and loans 21.1 319,752,013 37,532,549 21,220,927 27,366,891 230,277,282 3,354,364
Factoring receivables 21.2 4,896,713 713,839 2,366,691 174,887 974,133 667,162
Gold loan advances receivables 21.3 6,709,908 3,956,087 2,398,044 355,776 - -
Trade and other current assets
Financial Assets 25 11,900,266 4,886,824 3,249,528 1,778,836 1,439,902 545,175
513,424,418 122,137,633 60,904,056 63,222,714 257,077,855 10,082,160
292
LOLC HOLDINGS PLC
56 Maturity analysis of financial assets and liabilities

amount month
Company
Cash and cash equivalents 17.1 1,611,459 1,611,460 - - - -
profit or loss
Equity securities 18.3 263,429 263,429
Investment securities -
Financial assets measured at fair value
Corporate securities 19.1.1 273 273 - - - -
Designated FVOCI investment 19.1.3 98,265 - - - - 98,265
securities
Equity securities with readily 19.1.4 223,278 - - - - 223,278
determinable fair values
Corporate bonds 19.2.1 165,779 165,779
Investments in term deposits 19.2.3 2,774,266 - 917,106 1,857,160
Financial assets at amortised cost/ -
Financial assets at amortised cost/ -
Advances and loans 21.1 5,510,840 318,236 - 1,119,262 4,073,343 -
Trade and other current assets -
Financial Assets 25 32,680,989 32,139,471 430,247 111,271 -
43,331,018 34,235,219 1,613,222 3,087,693 4,073,343 321,543
293
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Maturity analysis of financial assets and liabilities

56.2 Maturity analysis of financial liabilities
amount month
Group
Non-derivative liabilities
Bank overdrafts 17.2 4,022,416 2,564,883 1,457,534 - - -
Trading liabilities - fair value through 36 114,349 34,305 65,179 14,865 - -
profit or loss
Financial liabilities at amortised cost/
Deposits from customers
Fixed deposits 37.2 196,983,751 48,055,359 81,379,452 59,087,688 8,461,252 -
Saving / Demand deposits 37.3 17,881,792 11,146,369 3,214,316 704,082 2,817,025 -
Interest / profits payable 37.4 6,119,586 2,605,205 1,582,806 883,793 1,047,782 -
Commercial papers & promissory 38 33,851,128 10,577,236 11,531,998 11,741,895 - -
notes
Short-term loans and others 38 71,821,448 29,197,911 30,340,422 12,283,115 - -
Debentures 38.1 18,752,371 - 252,371 5,000,000 13,500,000 -
Finance lease liabilities 38.2 953,611 27,062 94,715 202,962 537,128 91,745
Long-term borrowings 38.3 189,450,021 24,183,032 25,293,951 24,050,746 94,959,190 20,963,102
Operating Lease Liability 38.4 8,198,503 90,433 248,247 512,452 536,502 6,810,869
Trade and other payables
Financial liabilities 41 12,924,406 4,797,715 1,615,803 1,300,948 1,659,901 3,550,037
561,073,383 133,279,509 157,076,794 115,782,547 123,518,780 31,415,753
Company
Bank overdrafts 17.2 1,039,522 1,039,522 - - - -
Financial liabilities at amortised cost/ -
Commercial papers & promissory 38 34,949,429 8,645,693 11,977,049 14,326,687 - -
notes
Short-term loans and others 38 45,992,504 - 45,992,504 - - -
Debentures 38.1 6,985,839 (879) 6,387 34,272 6,946,059 -
Finance lease liabilities 38.2 95,346 3,381 6,880 30,666 54,419 -
Long-term borrowings 38.3 6,735,829 466,356 897,243 2,692,400 2,679,829 -
Operating Lease Liability 38.4 653,848 5,512 16,535 44,092 470,294 117,415
Trade and other payables -
Financial liabilities 41 1,329,893 1,300,428 24,496 4,970 - -
97,782,210 11,460,013 58,921,093 17,133,089 10,150,600 117,415
294
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amount month
Group
Cash and cash equivalents 17.1 76,082,984 73,398,725 1,966,851 717,409 - -
profit or loss
Corporate securities 18.1 5,685,239 2,001,463 2,420,916 1,262,861 -
Government securities 18.2 9,009 9,009 - - - -
Equity securities 18.3 1,694,950 1,682,580 - 12,370 -
Derivative assets held for risk 18.4 879,882 281,278 413,445 185,159 -
management
Financial assets measured at fair 19.1 16,538,650 2,558,722 1,106,871 4,112,788 4,643,216 4,117,053
value through other comprehensive
income/Available-for-sale
investment securities
Financial assets at amortised cost / 19.2 77,122,105 18,647,979 21,524,023 22,514,118 13,930,776 505,209
Loans & receivables
Finance lease receivables 20.1 56,227,521 8,723,861 16,607,885 17,816,453 12,958,587 120,736
Hire purchase receivables 20.2 950 - 950 - - -
Advances and loans 21.1 640,676,197 75,202,687 21,641,198 34,317,427 143,368,221 366,146,665
Factoring receivables 21.2 7,273,787 1,060,367 5,682,959 259,785 270,676 -
Gold loan advances receivables 21.3 3,095,856 1,825,282 1,106,423 164,150 - -
Financial Assets 25 16,957,713 6,963,657 4,630,532 2,534,816 2,051,840 776,867
902,248,132 192,355,609 77,105,340 83,897,336 177,223,316 371,666,531
295
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amount month
Company
Cash and cash equivalents 17.1 945,468 945,468 - - - -
profit or loss
Derivative assets held for risk 18.4 285,735 285,735 - - - -
management
Financial assets measured at fair 19.1 294,433 390 - - - 294,043
value through other comprehensive
income
Corporate securities 19.1.1 390 390 - - - -
Designated FVOCI investment 19.1.3 70,765 - 70,765 - - -
securities
Equity securities with readily 19.1.4 223,278 - - 223,278 - -
determinable fair values
Corporate bonds 19.2.1 142,717 - - 142,717 - -
Investments in term deposits 19.2.3 3,581,925 - - 3,581,925 - -
Operating lease receivables 20.3 3,287 3,287 - - - -
Advances and loans 21.1 2,483,657 733,938 - 1,745,788 - 3,930
Financial Assets 25 17,304,653 253,428 39,196 45,814 33,228 16,932,987
25,041,875 2,222,246 109,961 5,739,522 33,228 16,936,918
296
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56.4 Maturity analysis of financial liabilities

amount month
Group
Bank overdrafts 17.2 10,508,019 6,700,410 3,807,610 - - -
Trading liabilities - fair value through 36 841,492 - 841,492 - - -
profit or loss
Deposits from customers
Fixed deposits 37.2 411,570,694 100,405,122 170,031,271 123,455,669 17,678,632 -
Saving / Demand deposits 37.3 35,661,668 22,229,209 6,410,313 1,404,151 5,617,995 -
Interest / profits payable 37.4 4,842,678 2,061,605 1,252,539 699,382 829,153 -
Commercial papers & promissory notes 38 25,889,571 8,089,542 8,819,750 5,268,941 3,711,339 -
Short-term loans and others 38 62,983,047 25,604,794 26,606,707 2,211,471 3,552,455 5,007,621
Debentures 38.1 20,812,030 3,703 8,000,000 5,000,000 5,808,327 2,000,000
Finance lease liabilities 38.2 485,234 29,493 9,293 135,851 213,533 97,064
Long-term borrowings 38.3 267,256,359 34,114,902 35,682,071 11,471,706 50,586,947 135,400,732
Financial liabilities 41 25,883,963 9,608,479 3,236,001 2,605,435 3,324,317 7,109,730
866,734,755 208,847,260 263,855,556 157,094,096 91,322,699 149,615,146
Company
Bank overdrafts 17.2 3,629,017 3,629,017 - - - -
Commercial papers & promissory notes 38 12,760,945 7,426,470 4,359,233 975,242 - -
Short-term loans and others 38 41,567,796 41,567,796 - - - -
Debentures 38.1 7,808,439 111 - 5,808,327 2,000,000 -
Finance lease liabilities 38.2 133,048 2,947 5,998 28,756 95,347 -
Long-term borrowings 38.3 7,624,808 3,461,649 329,716 1,449,059 2,384,383 -
Financial liabilities 41 1,705,046 1,705,046 - - - -
75,229,098 57,793,036 4,694,947 8,261,383 4,479,731 -
297
LOLC HOLDINGS PLC
57 Operating Segments
For the year ended 31 March 2020 Financial Long term Manufacturing
services & general & trading
insurance
Rs. ‘000 Rs. ‘000 Rs. ‘000
For the year ended 31 March 2020

Gross income 103,554,575 7,768,230 24,786,737
Net Interest Cost (48,650,679) (6,486) (5,313,679)
Cost of Sales - - (15,457,434)
Profit before Operating Expenses 54,903,896 7,761,744 4,015,624
Operating Expenses (53,939,609) (6,307,706) (3,031,789)

Results from Operating Expenses 964,287 1,454,038 983,835
Share of profits of equity accounted investees, net of tax - - -
Results on acquisition and divestment of group investments - - -
Profit before tax from continuing operations 964,287 1,454,038 983,835
Profit/(loss) after tax for the year from discontinued operations and assets 23,811,624 - -
held for sale
Profit before tax from discontinued operations 24,775,911 - -
Profit before tax of the group 25,740,197 1,454,038 983,835
For the year ended 31 March 2019 Financial Long term Manufacturing
insurance
Rs. ‘000 Rs. ‘000 Rs. ‘000
Gross income 97,397,589 6,773,153 26,476,933

Net Interest Cost (47,077,562) (10,427) (4,530,975)
Cost of Sales - - (15,679,102)
Profit before Operating Expenses 50,320,027 6,762,726 6,266,856
Operating Expenses (43,709,822) (6,937,838) (3,040,256)
Results from Operating Expenses 6,610,204 (175,112) 3,226,600
Share of profits of equity accounted investees, net of tax - - -
Results on acquisition and divestment of group investments - - -
Profit Before Taxation 6,610,204 (175,112) 3,226,600
Profit/(loss) after tax for the year from discontinued operations and assets 17,308,839 - -
held for sale
Profit before tax from discontinued operations 23,919,043 - -
Profit before tax of the group 30,529,248 (175,112) 3,226,600
298
LOLC HOLDINGS PLC
Leisure & Plantation Equity Others & Total

entertainment & Power accounted eliminations
Generation investees
Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
1,884,902 2,518,945 - (10,071,711) 130,441,678

(3,084,220) (869,988) - 3,073,358 (54,851,694)
(363,913) (909,711) - (408,861) (17,139,918)
(1,563,231) 739,246 - (7,407,214) 58,450,067
(1,417,137) (3,523,222) - 6,146,512 (62,072,952)

(2,980,368) (2,783,976) - (1,260,702) (3,622,886)
- - 1,019,970 - 1,019,970
- - - 5,979,045 5,979,045
(2,980,368) (2,783,976) 1,019,970 4,718,343 3,376,129
- (62,588) - - 23,749,036
- (2,846,564) - - 27,125,165
(2,980,368) (5,630,540) 1,019,970 4,718,343 27,125,165

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
1,853,414 2,891,551 - (11,078,733) 124,313,907

(2,301,958) (608,060) - 5,888,329 (48,640,653)
(486,598) (746,032) - (159,090) (17,070,822)
(935,142) 1,537,460 - (5,349,494) 58,602,433
(1,259,144) (1,357,913) - 6,143,269 (50,161,704)
(2,194,286) 179,547 - 793,775 8,440,728
- - 1,108,860 - 1,108,860
- - - - -
(2,194,286) 179,547 1,108,860 793,775 9,549,588
- (40,867) - - 17,267,972
- 138,680 - - 26,817,560
(2,194,286) 318,227 1,108,860 793,775 26,817,560
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Inter-segment revenues are eliminated upon consolidation and reflected in the ‘adjustments and eliminations’ column.
All other adjustments and eliminations are part of detailed reconciliations presented further below.
Financial Long term Manufacturing

insurance
Rs. ‘000 Rs. ‘000 Rs. ‘000

Net impairment (loss) / reversal on financial assets 16,852,947 4,396 295,507
Depreciation and amortisation 1,848,667 66,763 433,855
Net impairment (loss) / reversal on financial assets 2,124,468 - -
Depreciation and amortisation 1,115,775 - -
Total assets (as at 31 March 2020) 653,752,531 16,122,010 66,325,842
Total liabilities (as at 31 March 2020) 523,458,256 10,655,428 32,909,220
Total assets (as at 31 March 2020) 630,050,645 - -
Total liabilities (as at 31 March 2020) 533,915,312 - -

Net impairment (loss) / reversal on financial assets 11,492,363 10,163 81,676
Depreciation and amortisation 1,176,558 66,253 438,956
Net impairment (loss) / reversal on financial assets 2,594,722 - -
Depreciation and amortisation 415,890 - -
Total assets (as at 31 March 2019) 1,024,876,788 12,337,061 86,745,185

Total liabilities (as at 31 March 2019) 849,559,239 8,436,683 35,461,339
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LOLC HOLDINGS PLC

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
33,207 - - 37,739 17,223,797

264,332 1,390,761 - 119,548 4,123,926
-
- - - - 2,124,468
- 9,773 - - 1,125,548
67,515,914 52,650,054 - (150,559,271) 705,807,079

42,905,676 13,883,905 - (34,408,969) 589,403,517
- 61,200 - - 630,111,845
- 22,670 - - 533,937,982
2,197 - - (119,898) 11,466,501

253,462 246,347 - (8,885) 2,172,690
- - - 2,594,722
- 13,106 - 428,996
55,763,890 10,745,557 - (146,721,398) 1,043,747,083

29,867,029 7,214,592 - (39,011,929) 891,526,953
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LOLC HOLDINGS PLC
57.1 Geographical segments, based on the location of assets

For the year ended 31 March 2020 Sri Lanka Singapore Cambodia
Rs. ‘000 Rs. ‘000 Rs. ‘000
From Continuing Operations

Segmental Income 98,060,001 46,281 27,240,670
Segmental results 2,868,284 (2,226,072) 5,609,361
From Discontinued Operations

Segmental Income 5,525 - 72,928,141
Segmental results (62,588) - 23,811,624

Segmental Assets 303,790,199 94,524,016 196,006,549
Segmental Liabilities 287,061,920 32,315,341 167,260,021

Segmental Assets 61,200 - 630,050,645
Segmental Liabilities 22,670 - 533,915,312
For the year ended 31 March 2019 Sri Lanka Singapore Cambodia
Rs. ‘000 Rs. ‘000 Rs. ‘000

Segmental Income 104,724,926 (1,558) 70,659,469
Segmental results 5,051,062 (910,277) 22,521,171

Segmental Income 27,620 - 53,706,685
Segmental results (40,867) - 17,308,839
Segmental Assets 358,311,078 77,286,573 579,529,651

Segmental Liabilities 358,858,524 16,298,982 501,644,824
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LOLC HOLDINGS PLC
Maldives Myanmar Indonesia Pakistan Africa Other Group Total

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
74,726 3,376,827 336,816 1,148,780 109,871 47,707 130,441,678

29,377 535,678 (530,523) (54,214) (2,223,667) (632,096) 3,376,128
- - - - 72,933,666
- - - - 23,749,036
22,783,140 20,133,835 2,019,092 5,049,899 16,915,719 44,584,630 705,807,079

13,961,954 15,987,544 1,298,556 2,399,062 7,356,018 6,297,566 533,937,982
- - - - 630,111,845
- - - - 533,937,982
Maldives Myanmar Indonesia Pakistan Group Total

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000
32,834 1,743,629 128,639 760,273 178,048,212

7,273 336,037 (321,111) 133,407 26,817,560
- - - - 53,734,305
- - - - 17,267,972
14,939,207 9,237,361 1,316,003 3,127,209 1,043,747,083

7,021,893 7,378,268 148,265 176,197 891,526,953
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58 Financial risk management

The Group has loans, and consumer financial portfolios, trade and other receivables and cash and short-term deposits that arise
directly from its operations. The Group also holds other financial instruments such as fair value through other comprehensive
income and fair value through profit or loss financial instruments and may enter into derivative transactions. The Group’s principal
financial liabilities, comprise of customer deposits, loans and borrowings, trade and other payables and financial guarantee
contracts. The main purpose of these financial liabilities is to finance the Group’s operations and to provide guarantees to support
its operations. The financial risk governance framework provides assurance to the Group’s senior management that the Group’s
financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and
managed in accordance with the Group’s policies and risk objectives.
The Group has exposure to the following risks from financial instruments:
1 Credit risk
2 Liquidity risk
3 Market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and
processes for measuring and managing risk, and the Group’s management of capital.
Risk management framework
The board of directors of each Company has overall responsibility for the establishment and oversight of Group’s risk management
framework for the companies within the group. The Board has established Integrated Risk Management Committees (IRMC) for
each financial sector company, which are responsible for developing and monitoring financial services risk management policies in
their specified areas. All Board committees have both executive and non-executive members and report regularly to the Board of
Directors on their activities.
The Group’s risk management policies are established to identify and analyse the risks faced by Group, to set appropriate risk limits
and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions, products and services offered. The Company, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment, in which all employees understand their roles and
obligations.
The Audit Committee of each Company is responsible for monitoring compliance with the risk management policies and
procedures, and for reviewing the adequacy of the risk management framework in relation to the risks faced by the each Group of
Company. Each financial sector Company’s audit committee is assisted in these functions by Enterprise Risk Management division
(ERM). ERM undertakes both regular and ad-hoc reviews of risk management controls and procedures, the results of which are
reported to each financial sector Company’s Audit Committee.
1 Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s loans and advances to customers.
The Group exposure to the credit risk is mainly derived from financial sector companies as the sector engage primarily in providing
financing facilities to its customers. The Credit risk is managed by evaluating the credit worthiness and by periodical review on the
credit granted.
Management of credit risk

The Board of Directors of each financial sector Company has delegated responsibility for the oversight of credit risk to its Credit
Committee. A separate Credit department, reporting to each Credit Committees, is responsible for management of the Financial
sector Companies’ credit risk, including:
1. Formulating credit policies in consultation with business units, covering collateral requirements, credit assessment, risk grading and
reporting, documentary and legal procedures, and compliance with regulatory and statutory requirements.
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LOLC HOLDINGS PLC
2. Establishing the authorisation structure for the approval and renewal of credit facilities. Authorisation limits are allocated to business
unit Credit Officers. Larger facilities require approval by Group Credit, Head of Group Credit, Credit Committee or the board of
directors as appropriate.
3. Reviewing and assessing credit risk. Group Credit assesses all credit exposures in excess of designated limits, prior to facilities
being committed to customers by the business unit concerned. Renewals and reviews of facilities are subjected to the same review
process.
4. Reviewing compliance of business units with agreed exposure limits, including those for selected industries, country risk and
product types. Regular reports on the credit quality of local portfolios are provided to Group Credit who may require appropriate
corrective action to be taken.
5. Providing advice, guidance and specialist skills to business units to promote best practice throughout the financial sector in the
management of credit risk.
The Impact of COVID 19

The sudden shock arisen from the outbreak of the COVID - 19 globally since January 2020 caused massive economic disruption
leading to uncertainty in the whole world. Sri Lanka as a country exposed to this risk little late in March 2020 and as an immediate
precautionary measure the Government imposed island wide curfew. Since no access to office was feasible the Group immediately
planned to “work from home’ and facilitated the key management personnel and the key required personnel to work from home. To
ensure the timely payment of Fixed Deposit Interest, the management sought assistance from the Company bankers and provided
an uninterrupted service during the curfew period.
As the banking and NBFI sectors are the backbone of any economy, any significant economic downturn will directly affect
banks and NBFI. Due to difficult operating conditions, the performance of the banking sector and the NBFIs in particular will be
more challenging, affecting the quality of the asset and the recovery of profitability. Relief measures for affected businesses and
individuals in line with the directions issued by the CBSL. (The six-month moratorium) are expected to mitigate the impact on
individuals and businesses, but will increase non-performing loans by 2020. Further Fitch Ratings, the outlook for the country,
banking and NBFI sector in Sri Lanka is negative for 2020. The liquidity position of the financial sector will be affected by the debt
moratorium, although this is counteracted to some extent by the lowering of liquidity requirements for financial institutions. The
need to strengthen the capital of NBFIs will be felt even more, as it must have the financial capacity to detect crises like this. Stress
testing will also be important because of the uncertainty.
The Group has assessed the probable impact stemming from COVID – 19 outbreak and the key assessments are listed below.
- Based on the available information and management’s best judgement, it is determined the appropriateness of the Going
concern assumptions in preparing Financial Statements for the year ended 31 March 2020.
- Despite the challenging environment of having difficulties in collecting the group dues and the difficulties in getting funding lines
from banks and other financial institutions, the Group was able to maintain a stable liquidity position and safeguard the interest
of the stakeholders.
- The unutilised Overdraft facilities, the available excess investment and already negotiated funding lines and were used as a
cushion to absorb any sudden liquidity shocks.
- A more prudent cost control mechanism was in place which ensured an effective cost structure in the Group.
There is a considerable degree of judgement involved in making the above assessments. The underline assumptions are also
subject to certain level of uncertainty and are mostly out of the control of the Group. Hence the actual economic conditions
are likely to be different from the anticipated events. The effect of those differences may have significant impact on accounting
judgement and estimates included in these Financial Statements.
The Management evaluated the key assumptions used in the above estimates and judgements under probable stress scenarios
such as, retention ratio of Fixed Deposits, Deposit renewal ratio, Ratio of Rental Collection and Re-imposing of CBSL liquid asset
requirement.
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LOLC HOLDINGS PLC
Credit Risk -Impairment Provision as per ECL for financial assets

The Group considered the Probability of Default (PD), Loss Given Default (LGD) and Economic Factor Adjustment (EFA) computed
as at February 29, 2020, in order to estimate the Expected Credit Loss (ECL) as at March 31, 2020, due to uncertainty and lack of
sufficient information to make any adjustments to capture the potential impact of COVID 19 based on the “COVID - 19 Pandemic:
Guidance Notes on the Implications on Financial Reporting” issued by the institute of chartered accountants of Sri Lanka has
provided reporting guidelines.
Allowances for impairment

The Group establishes an allowance for impairment losses on assets carried at amortised cost that represents its estimate of
expected losses in its lease and loan portfolio. The main components of this allowance are a specific loss component that relates
to individually significant exposures, and, for assets measured at amortised cost, a collective loan loss allowance established for
groups of homogeneous assets as well as for individually significant exposures that were subject to individual assessment for
impairment but not found to be individually impaired.
Past due but not impaired loans and investment debt securities
Past due but not impaired loans and investment debt securities, other than those carried at fair value through profit or loss,
are those for which contractual interest or principal payments are past due, but each financial sector Company believes that
impairment is not appropriate on the basis of the level of security/collateral available and/or the stage of collection of amounts
owed to each Company.
The following table shows the overdue amounts for the financial assets categories.
Group Company
Neither past due Overdue Neither past due Overdue
nor impaired nor impaired
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Cash in hand and favourable bank balances 56,135,056 - 1,611,459 -

Trading assets - fair value through profit or loss 6,639,075 - 263,429 -
Investment securities 49,289,886 - 3,261,861 -
Loan and lease portfolio 371,549,847 17,910,288 5,372,981 140,299
Trade and other current assets 11,900,266 - 32,680,989 -
Impairment losses related to each of the above asset classes are shown in note 9 to these financial statements.
The following table shows the maximum exposure and net exposure to credit quality by class of financial assets.
Group Company
Gross exposure Net exposure Gross exposure Net exposure
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Cash in hand and favourable bank balances 56,135,056 56,135,056 1,611,459 1,611,459
Trading assets - fair value through profit or loss 6,639,075 6,631,032 263,429 263,429
Investment securities 49,289,886 44,462,325 3,261,861 3,261,861
Loan and lease portfolio 389,460,135 - 5,513,280 5,513,280
Trade and other current assets 11,900,266 11,900,266 32,680,989 32,680,989
Maximum credit risk exposure

Credit risk is the risk of potential loss resulting from the failure of a customer/borrower or counterparty to honour its financial or
contractual obligations to the Group. It may arise from direct lending activities as well as from commitments and contingencies.
Total credit risk of the Group constitutes counterparty risk, concentration risk and settlement risk.
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Group Company
Rs.'000 % Rs.'000 %
Net carrying amount of credit exposure
Cash in hand and favourable bank balances 56,135,056 10.90% 1,611,459 3.72%
Trading assets - fair value through profit or loss 6,639,075 1.29% 263,429 0.61%
Investment securities 49,289,886 9.57% 3,261,861 7.53%
Financial assets at amortised cost/ Finance lease receivables, 58,101,502 11.28% 2,440 0.01%
Financial assets at amortised cost/ Advances and other loans 331,358,633 64.35% 5,510,840 12.72%
Insurance premium receivables 1,530,695 0.30% - 0.00%
Financial Assets 11,900,266 2.31% 32,680,989 75.42%
514,955,113 43,331,018
Loans with renegotiated terms

Loans with renegotiated terms are loans that have been restructured due to deterioration in the borrower’s financial position. In
respect of some of these loans, financial sector companies have made concessions that it would not otherwise consider. Once the
loan is restructured it remains in this category independent of satisfactory performance after restructuring.
Allowances for impairment

Each financial sector Company establishes an allowance for impairment losses on assets carried at amortised cost that represents
its estimate of incurred losses in its loan. The main components of this allowance are a specific loss component that relates to
individually significant exposures, and, for assets measured at amortised cost, a collective loan loss allowance established for each
financial sector Company’s homogeneous assets as well as for individually significant exposures that were subject to individual
assessment for impairment but not found to be individually impaired. Assets carried at fair value through profit or loss are not
subject to impairment testing as the measure of fair value reflects the credit quality of each asset.
Age analysis of Non-performing loans by product distribution

(Excluding interest receivables)
Carrying amount 3-6 months 6-12 months 12-18 months 18 months and
above
Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000
Loan Category
Overdrafts/ Speed drafts 4,113,926 1,634,918 969,152 224,299 1,285,557
Trade finance 8,810,144 4,602,168 2,839,283 614,760 753,934
Credit cards 424,006 247,160 176,846 - -
Pawning 203,720 109,572 24,410 69,738 -
Staff loans 134,389 56,991 26,792 13,372 37,234
Housing development loans 531,540 274,614 242,224 12,822 1,879
Enterprise development loans 850,271 432,949 378,802 33,918 4,602
Personal loans 41,722 22,907 17,476 1,339 -
Micro finance/ Group loans 5,525,099 2,891,562 2,413,633 218,227 1,676
Factoring 4,781,056 3,262,306 479,660 1,039,090 -
Loans against fixed deposits 3,842 297 1,021 2,338 187
Term loans
Short term 1,995,959 30,497 1,229,449 450,044 285,968
Long term 3,258,941 1,689,162 890,375 455,281 224,123
Finance Lease 346,224 108,200 103,423 88,841 45,760
Revolving 60,369 - 148 822 59,399
Non revolving 140,743 - 5,269 15,010 120,465
31,221,951 15,363,304 9,797,964 3,239,900 2,820,783
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Write-off policy
Each financial sector Company writes off a loan, and any related allowances for impairment losses, when management determines
that the loan or security is uncollectible. This determination is made after considering information such as the occurrence of
significant changes in the borrower’s/issuer’s financial position such that the borrower/issuer can no longer pay the obligation, or
that proceeds from collateral will not be sufficient to pay back the entire exposure. For smaller balance standardised loans, write-off
decisions generally are based on a product-specific past due status.
Each financial sector Company holds collateral against loans and advances to customers in the form of mortgage interests over
property, other registered securities over assets, and guarantees. Estimates of fair value are based on the value of collateral
assessed at the time of borrowing, and generally are not updated except when a loan is individually assessed as impaired.
Trade & Other Receivables

Each group of Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade
and other receivables. The main components of this allowance are a specific loss component that relates to individually significant
exposures, and a collective loss component established for each group of Company’s similar assets in respect of losses that have
been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics of
the portfolio.
2 Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with its financial liabilities that are
settled by delivering cash or another financial asset.
Management of liquidity risk

The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Group’s entities.
For the financial sector companies, a Central Treasury manages the liquidity risk for financial sector. Central Treasury receives
information from other business units regarding the liquidity profile of their financial assets and liabilities and details of other
projected cash flows arising from projected future business. Central Treasury then maintains a portfolio of short-term liquid assets,
largely made up of short-term liquid investment securities, loans and advances to customers and other inter-group facilities, to
ensure that sufficient liquidity is maintained within the financial sector as a whole. The liquidity requirements of business units and
subsidiaries are met through short-term loans from Central Treasury to cover any short-term fluctuations and longer term funding to
address any structural liquidity requirements.
When a financial sector subsidiary is subject to a liquidity limit imposed by its local regulator, the subsidiary is responsible for
managing its overall liquidity within the regulatory limit in co-ordination with central Treasury.
The financial sector relies on deposits from customers and issued debt securities and borrowings as its primary sources of funding.
While the Group’s debt securities have maturities of over one year, deposits from customers generally have shorter maturities and a
large proportion of them are repayable on demand. The short-term nature of these deposits increases the financial sector’s liquidity
risk and the sector actively manages this risk through maintaining competitive pricing and constant monitoring of market trends.
With the onset of COVID 19 pandemic in late March of this year, the Group introduced more rigor to the processes already in place
to manage its liquid assets. While closely monitoring any developments related to the pandemic, it has continued to keep its risk
management measures under review to readily respond to changing circumstances. The Group is comfortable with its existing
buffer of liquid assets. The actions taken will help to maintain existing liquidity position while mitigating any disruptive effect on
liquidity that may arise due to the continuously evolving nature of the pandemic.
There is no any credit downgrade or other factors that could negatively impact the Group’s ability to access adequate financing.
The Group does not expect any major impacts on liquidity risk due to COVID 19 outbreak and the Company has adequate liquid /
cash resources to meet its liabilities.
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The economic fallout of the COVID-19 pandemic resulted in sharp losses in equity market indexes and subsequent closure of the
exchange for trading. However, equities have retraced slightly and management is monitoring the equity price movements.
Maturity analysis for financial liabilities

Note 53 to these financial statements shows the discounted cash flows on the Company’s non-derivative financial liabilities on the
basis of their earliest possible contractual maturity.
To manage the liquidity risk arising from financial liabilities, the Group holds liquid assets comprising cash and cash equivalents and
investment securities for which there an active and liquid market is available.
3 Market Risk
Market risk is the risk that changes in market prices, such as interest rates, equity prices, foreign exchange rates and credit
spreads will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management
is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
Overall non-trading interest rate risk positions are managed by Financial sector’s Central Treasury, which uses investment securities,
advances to customers, deposits from customers and derivative instruments to manage the overall position arising from the
Group’s market based activities.
The management of interest rate risk against interest rate gap limits is supplemented by monitoring the sensitivity of the Company’s
financial assets and liabilities to various standard and non-standard interest rate scenarios. An analysis of the Company’s sensitivity
to an increase or decrease in market interest rates, assuming no asymmetrical movement in yield curves and a constant financial
position, is as follows;
Sensitivity of projected
Group
net interest income reported equity
1% parallel 1% parallel 1% parallel 1% parallel
increase decrease increase decrease
Rs.'000 Rs.'000 Rs.'000 Rs.'000
For the year ended 31 March 2020 (743,198) 743,198 (596,105) 596,105
Sensitivity of projected
Company
net interest income reported equity
1% parallel 1% parallel 1% parallel 1% parallel
increase decrease increase decrease
Rs.'000 Rs.'000 Rs.'000 Rs.'000
For the year ended 31 March 2020 (107,240) 107,240 (93,256) 93,256
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Currency risk
The Group has exposure to the currency fluctuations through its foreign assets and liabilities held by following main foreign
subsidiaries.
Subsidiary Country of Functional currency

incorporation
B Commodities ME(FZE) UAE United State Dollar - USD

Bodufaru Beach Resorts (Private) Limited Maldives United State Dollar - USD
Browns Ari Resort (Pvt) Ltd Maldives United State Dollar - USD
Browns Kaafu N Resort (Pvt) Ltd Maldives United State Dollar - USD
Browns Machinery (Cambodia) Co., Ltd Cambodia United State Dollar - USD
Browns Raa Resort (Pvt) Ltd Maldives United State Dollar - USD
Grey Reach Investments Ltd (GRIL) British Virgin Island United State Dollar - USD
LOLC (Pvt) Ltd Singapore United State Dollar - USD
LOLC Africa Holdings (Pvt) Ltd Singapore United State Dollar - USD
LOLC Asia (Pvt) Ltd Singapore United State Dollar - USD
LOLC Cambodia PLC Cambodia Cambodian riel - KHR
LOLC Finance Zambia Limited Republic of Zambia United State Dollar - USD
LOLC Financial Sector Holdings Private Limited Singapore United State Dollar - USD
LOLC International (Pvt) Ltd Singapore United State Dollar - USD
LOLC Mauritius Holdings Limited Mauritius United State Dollar - USD
LOLC MEKONG Holdings Private Limited Singapore United State Dollar - USD
LOLC Myanmar Micro-Finance Company Limited Myanmar Myanmar Kyat (MMK)
NPH Investment (Private) Limited Maldives United State Dollar - USD
Pak Oman Micro finance Bank Limited Pakistan Pakistani Rupee (PKR)
PRASAC Micro Finance Institution Limited Cambodia United State Dollar - USD
PT LOLC Management Indonesia Indonesia Indonesian Rupiah (IDR)
PT Sarana Sumut Ventura Indonesia Indonesian Rupiah (IDR)
Sunbird Bioenergy (SL) Ltd Sierra Leone Euro
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LOLC HOLDINGS PLC
Sensitivity analysis
A reasonably possible strengthening (weakening) of KHR, USD and MMK against all other currencies as at 31 March 2019, would
have affected the measurement of individual assets and liabilities denominated in a foreign currency and affected equity by the
amounts shown below. This analysis assumes that all other variables, in particular interest rates remain constant and any change in
assets liability positions.
100 basis points movement in

As at 31 March 2020 strengthening Weakening
Rs.'000 Rs.'000
KHR 287,177 (287,177)

MMK 41,463 (41,463)
USD 1,660,445 (1,660,445)
IDR 7,205 (7,205)
PKR 26,508 (26,508)
EURO 382,871 (382,871)
Equity price risk

Although the Group’s exposure to equity price risk is negligible, mark-to-market calculations are conducted daily on FVTPL and
FVOCI portfolios. The Group has also calculated VaR on equity portfolio. Below table summarises the impact of a shock of 10% on
equity price on profit, other comprehensive income (OCI) and equity.
Financial assets Financial assets Total

recognised fair value
through profit through other
or loss comprehensive
income
Rs.'000 Rs.'000 Rs.'000
Market value of Equity Securities 1,556,659 468,216 2,024,875
Stress Level Impact on Income Impact on OCI Impact on Equity

Statement
Rs. '000 Rs. '000 Rs. '000
Shock of 10% on equity price (upward) 155,666 46,822 202,488
Shock of 10% on equity price (downward) (155,666) (46,822) (202,488)
Interest Rate Risk

Interest rates have been reduced as advised by the Central Bank of Sri Lanka and is likely to have negative impact on the interest
revenue, cash flows and liquidity positions of the Group.
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LOLC HOLDINGS PLC
58.1 Financial risk management

Following table shows the maximum risk positions
Group
As at 31 March 2020 Carrying Non-current Current %
amount of allocation
Note Rs.'000 Rs.'000 Rs.'000 Rs.’000
Assets
Cash in hand and favourable bank balances 56,135,056 - 56,135,056 4.80%
Trading assets - fair value through profit or loss 5,082,416 - 5,082,416 0.43%
Investment securities 48,821,670 16,387,326 32,434,344 4.17%
Assets directly associated with the assets held for 630,111,845 - 630,111,845 53.85%
sale and discontinued operations
Financial assets at amortised cost/ Finance lease 58,101,502 13,514,670 44,586,832 4.97%
Financial assets at amortised cost/ Advances and 331,358,633 235,273 331,123,360 28.32%
other loans
Trade and other current assets 19,147,150 1,985,077 17,162,073 1.64%
Subsidiary companies - - - -
Jointly controlled entities - - - -
Equity accounted investees - Associates 21,262,046 21,262,046 - 1.82%
Total credit risk exposure 1,170,020,318 53,384,393 1,116,635,925 100.00%
Financial assets at fair value through P&L 1,556,659 - 1,556,659

Financial assets at fair value through OCI 468,216 - 468,216
Total equity risk exposure 2,024,875 - 2,024,875
Total 1,172,045,193 53,384,393 1,118,660,800
312
LOLC HOLDINGS PLC
Company
Carrying Non-current Current %
amount of allocation
Rs.'000 Rs.'000 Rs.'000 Rs.’000
1,611,459 - 1,611,459 1.16%

263,429 - 263,429 0.19%
3,261,861 321,543 2,940,318 2.35%
- - - -
2,440 - 2,440 0.00%
5,510,840 4,073,343 1,437,497 3.97%
32,993,948 32,993,948 23.77%

-
90,943,740 90,943,740 - 65.51%
- - - -
4,227,113 4,227,113 - 3.05%
138,814,830 99,565,739 39,249,092 100.00%
263,429 - 263,429
321,543 - 321,543
584,972 - 584,972
139,399,802 99,565,739 39,834,064
313
LOLC HOLDINGS PLC
59 Current/non-current distinction
Group Company
As at 31 March 2020 Carrying Non-current Current Carrying Non-current Current
amount amount
Note Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.'000 Rs.'000
Assets
Cash in hand and favourable 56,135,056 - 56,135,056 1,611,459 - 1,611,459
bank balances
Trading assets - fair value 6,639,075 - 6,639,075 263,429 - 263,429
through profit or loss
Investment securities 49,289,886 16,387,326 32,902,560 3,261,861 321,543 2,940,318
Assets directly associated 630,111,845 - 630,111,845 - - -
with the assets held for sale
Financial assets at amortised 58,101,502 13,514,670 44,586,832 2,440 - 2,440
cost/ Finance lease
receivables, hire purchases
Financial assets at amortised 331,358,633 235,272,941 96,085,692 5,510,840 4,073,343 1,437,497
cost/ Advances and other
loans
Insurance premium 1,530,695 - 1,530,695 - - -
receivables
Inventories 7,208,772 - 7,208,772 380,379 - 380,379
Current tax assets 2,051,283 - 2,051,283 198,824 - 198,824
Trade and other current 19,147,150 1,985,077 17,162,073 32,993,948 - 32,993,948
assets
Right of use assets 8,844,199 8,844,199 - 642,362 - 642,362
Investment properties 31,723,414 31,723,414 - 1,017,250 1,017,250 -
Biological assets; - - - -
Consumer biological assets 3,642,998 3,642,998 - - - -
Bearer biological assets 2,144,552 2,144,552 - - - -
Investments in group of
companies;
Subsidiary companies - - - 90,943,740 90,943,740 -
Equity accounted investees - 21,262,046 21,262,046 - 4,227,113 4,227,113 -
Associates
Deferred tax assets 1,259,639 1,259,639 - - - -
Intangible assets 3,741,289 3,741,289 - 413,539 413,539 -
Property, plant and 101,726,889 101,726,889 - 4,772,437 4,772,437 -
equipment
Total assets 1,335,918,924 441,505,041 894,413,883 146,239,621 105,768,964 40,470,657
314
LOLC HOLDINGS PLC
Group Company
As at 31 March 2020 Carrying Non-current Current Carrying Non-current Current
amount amount
Note Rs.'000 Rs.'000 Rs.'000 Rs.’000 Rs.'000 Rs.'000

Liabilities
Bank overdrafts 4,022,416 - 4,022,416 1,039,522 - 1,039,522
Trading liabilities - fair value 114,349 - 114,349 - - -
through profit or loss
Liabilities directly associated 533,937,982 - 533,937,982 - - -
with the assets held for sale
Financial liabilities at 220,985,129 12,326,059 208,659,070 - - -
amortised cost/ Deposits
liabilities
Financial liabilities at 323,027,083 137,398,536 185,628,547 95,412,795 10,268,015 85,144,780
amortised cost/ Interest
bearing borrowings
Insurance provision - life 4,283,247 4,283,247 - - - -
Insurance provision - general 4,358,359 4,358,359 - - - -
Current tax payables 5,250,922 - 5,250,922 660,323 - 660,323
Trade and other payables 20,340,533 5,209,939 15,130,594 1,390,050 - 1,390,050
Deferred tax liabilities 5,010,253 5,010,253 - 384,999 384,999 -
Deferred income 161,509 161,509 - - - -
Retirement benefit 1,850,445 1,850,445 - 320,392 320,392 -
obligations
Total liabilities 1,123,342,227 170,598,346 952,743,880 99,208,082 10,973,407 88,234,675
315
LOLC HOLDINGS PLC
Property Details of the Company
Property Details
Details of Land & Building of Company
Address Land Building No. of

Extent Extent buildings
A-R-P Sq. Ft.
1 No. 100/1, Sri Jayawardenapura Mawatha, Rajagiriya 1A-0R-04.86P 57,585 2

2 No. 100 A, Sri Jayawardenapura Mawatha, Rajagiriya 0A-2R-20.00P
3 Ampara Yard 1
4 No. 189, Puttalam Road, Kurunegala 1A-1R-12.83P
5 No. 538 & 538A, Main Street, Kalutara South, Kalutara 0A-1R-10.76P
6 Attikkagahawatta, Kochchikade 0A-0R-30P
Investment Property Details

1 No.246/56, Kandy Road, Eldeniya, Kadawatha 0A-0R-23.37P 1,831
2 No. 25/7, Wimalawatta Road, Mirihana, Nugegoda 0A-0R-33.40P
3 No. 52/40, Stanly Road, Jaffna 0A-0R-37.31P 9,984 1
4 No. 241 A, Maithreepala Senanayake Mawatha, Anuradhapua 0A-0R-13.01P 13,182 1
5 No. 240, Moragahayata, Colombo Road, Ratnapura 0A-0R-15.80P 10,173 1
6 Boralukanda, Athabendiwewa, Thalakiriyagama, Dambulla 2A-1R-15.9P 440 2
7 No. 54, Queen Mary Road, Gampaha 0A-0R-19.4P 10,975 1
8 No. 245, Katugastota Road, Mahaiyawa, Katugastota, Kandy 0A-0R-25.40P 9,136 1
9 No. 249/1, Katugastota Road, Kandy 0A-0R-7.3P
10 No. 245/1A, Maithreepala Senanayake Mawatha, Anuradhapua 0A-0R-10P
11 No.162, Kolonnawa Road, Gothatuwa 0A-0R-1.25P
12 No.164, 164A, Kolonnawa Road, Gothatuwa 0A-0R-3.8P
13 No.249/1, Katugastota, Kandy 0A-0R-8P
316
LOLC HOLDINGS PLC
Cost Last Valuation Carrying Amount

Land Building Accumulated Land Building 2020 2019
Depreciation
Rs. Rs. Rs. Rs. Rs. Rs. Rs.
535,795 149,205 - 1,648,000 447,000 2,095,000 2,095,000

245,000 - - 760,000 - 760,000 760,000
- 7,165 3,812 - - 4,786 4,786
261,999 - - 351,000 - 351,000 351,000
94,694 - - 101,000 - 101,000 101,000
42,679 - - 46,500 - 46,500 46,500
1,180,167 156,370 3,812 2,906,500 447,000 3,358,286 3,358,286
11,000 - - 24,000 - 24,000 23,000

20,000 - - 61,800 - 61,800 60,000
64,630 81,829 - 158,568 84,933 243,500 241,500
18,130 75,362 - 54,642 93,858 148,500 145,500
20,919 8,400 - 47,400 52,600 100,000 97,000
2,647 2,355 - 26,275 2,726 29,000 20,000
27,500 71,399 - 62,080 87,920 150,000 146,000
63,925 48,904 - 115,570 65,430 181,000 179,000
8,760 - - 11,000 - 11,000 11,000
23,999 - - 30,000 - 30,000 27,000
1,559 - - 1,700 - 1,700 1,625
8,339 - - 4,750 - 4,750 4,500
25,287 - - 32,000 - 32,000 -
296,694 288,249 - 629,784 387,466 1,017,250 956,125
317
LOLC HOLDINGS PLC
Ten Year Summary
For the year ended 31 - March 2011 2012 2013 2014

Group
Operating results
Gross income 32,505,970 35,532,754 42,391,175 40,204,723
Revenue 15,531,630 16,849,174 16,988,149 10,783,295

Cost of sales (9,911,222) (10,958,288) (10,721,916) (7,430,790)
Income 11,971,270 18,020,866 22,890,876 27,524,846
Other income/(expenses) 5,003,070 662,714 2,512,150 1,896,582
Interest costs (6,504,682) (9,345,806) (14,527,658) (14,849,178)
Profit before operating expenses 16,090,066 15,228,660 17,141,601 17,924,755

Other operating expenses (8,373,770) (11,345,046) (15,182,502) (15,516,766)
Results from operating activities 7,716,296 3,883,615 1,959,099 2,407,989
Negative goodwill 271,911 2,914,536 1,500,943 493,586

Profit/(loss) on disposal of subsidiaries and associates - - - 79,845
Share of profit of associate companies 178,522 269,649 246,129 1,454,158
Profit/ (loss) before tax expense from continuing operations 8,166,729 7,067,801 3,706,171 4,435,578
Income tax expense (1,259,279) (1,364,033) (1,153,884) (1,366,889)
Profit/ (loss) for the year from continuing operations 6,907,450 5,703,768 2,552,287 3,068,689
Profit/(loss) after tax for the year from discontinued operations and - - - -
assets held for sale
Profit/ (loss) for the year 6,907,450 5,703,768 2,552,287 3,068,689
As at 31 March
Assets
Net lending portfolio 58,569,073 79,113,885 87,814,685 90,544,883
Total assets 113,070,643 145,204,176 162,981,531 167,175,043
Liabilities
Total liabilities 78,255,809 101,990,824 119,608,773 127,519,528
Shareholders' funds
Share capital 475,200 475,200 475,200 475,200
Reserves 12,581,747 19,093,875 20,413,040 22,162,352
Non-controlling interests 21,757,886 23,644,277 22,484,518 17,017,963
Shareholders' funds 34,814,834 43,213,352 43,372,758 39,655,515
Investor ratios
Return on assets (%) 8.00 4.42 2.00 3.82
Return on equity (%) 25.88 14.62 5.90 7.05
Other information
No. of branches 73 80 80 87
No. of service centres 103 112 112 47
No. of subsidiary companies 48 66 84 69
No. of associate companies 7 9 10 13
No. of joint ventures 18 18 19 18
318
LOLC HOLDINGS PLC
2015 2016 2017 2018 2019 2020
44,585,605 66,765,048 91,715,284 149,516,214 124,313,908 130,441,678
10,728,830 20,228,126 23,441,032 22,602,826 24,805,609 24,944,735

(7,239,535) (12,702,851) (14,112,059) (15,428,148) (17,070,822) (17,139,918)
32,527,184 45,406,578 62,260,539 116,804,210 89,276,675 96,053,367
1,329,591 1,130,344 6,013,713 10,109,178 10,231,624 9,443,576
(12,508,370) (18,850,392) (33,159,212) (58,517,709) (48,640,652) (54,851,694)
24,837,700 35,211,805 44,444,013 75,570,357 58,602,434 58,450,066

(19,286,758) (26,499,091) (34,478,017) (52,741,405) (50,161,705) (62,072,952)
5,550,942 8,712,714 9,965,996 22,828,952 8,440,729 (3,622,886)
538,138 50,963 - - - -
- - 10,594,331 63,774 - 5,979,044
2,080,221 3,094,237 3,827,962 1,763,093 1,108,860 1,019,970
8,169,301 11,857,914 24,388,289 24,655,819 9,549,589 3,376,128

(1,870,647) (2,526,527) (3,458,452) (5,466,316) (3,616,665) (2,563,759)
6,298,654 9,331,387 20,929,837 19,189,503 5,932,924 812,369
- - - - 13,703,013 18,979,489
6,298,654 9,331,387 20,929,837 19,189,503 19,635,937 19,791,858
139,860,426 212,782,765 418,696,357 549,975,971 707,277,599 389,460,136

244,917,412 379,594,558 640,924,840 822,239,491 1,043,747,286 1,335,918,925
188,830,107 313,218,333 538,309,003 704,706,936 891,526,951 1,123,342,227
475,200 475,200 475,200 475,200 475,200 475,200

27,758,485 37,223,180 58,374,448 69,986,814 85,577,251 92,057,507
27,853,620 28,677,845 43,766,139 47,070,543 66,167,884 120,043,991
56,087,305 66,376,225 102,615,837 117,532,555 152,220,835 212,576,698
3.06 2.99 4.10 2.62 1.88 1.48

13.16 15.24 24.76 15.05 12.90 9.31
85 89 99 100 103 103

55 52 42 40 37 37
121 105 102 100 100 100
12 11 11 11 11 11
- - - - - -
319
LOLC HOLDINGS PLC
Ten Year Summary
For the year ended 31 - March 2011 2012 2013 2014

Company
Operating results
Gross income 6,344,361 7,561,277 4,683,628 5,460,558
Income 3,511,733 3,016,783 3,541,670 2,111,378

Other income/(expenses) 2,832,627 4,544,494 1,141,958 3,349,180
Interest costs (2,384,015) (2,571,566) (3,464,147) (2,720,484)
Profit before operating expenses 3,960,346 4,989,712 1,219,481 2,740,074

Other operating expenses (2,062,356) (1,917,994) (1,151,579) (2,051,032)
Profit before tax 1,897,989 3,071,718 67,902 689,042

Income tax expense (374,646) (94,464) (33,718) 5,218
Net profit after tax 1,523,343 2,977,254 34,184 694,260
As at 31 March
Assets
Total assets 54,212,952 58,028,455 53,239,340 49,254,147
Liabilities
Total liabilities 23,602,917 24,776,791 20,518,752 15,124,870
Shareholders' funds
Share capital 475,200 475,200 475,200 475,200
Reserves 30,134,835 32,776,464 32,245,388 33,654,077
Shareholders' funds 30,610,035 33,251,664 32,720,588 34,129,277
Investor ratios
Gross dividends - - 237,600 -
Total assets to shareholders' funds (times) 1.77 1.75 1.63 1.00

Return on assets (%) 3.63 5.31 0.06 1.35
Return on equity (%) 24.00 9.32 0.10 2.08
Other information
No. of employees 848 948 1,007 1075
320
LOLC HOLDINGS PLC
2015 2016 2017 2018 2019 2020
2,914,376 7,762,465 20,265,814 16,304,439 11,650,626 9,243,797
1,046,238 4,885,984 7,799,736 7,228,336 9,048,814 10,457,767

1,868,138 2,876,481 12,466,078 9,076,103 2,601,812 (1,213,970)
(1,686,278) (3,191,053) (5,270,261) (6,066,902) (8,020,071) (10,669,704)
1,228,098 4,571,412 14,995,553 10,237,537 3,630,554 (1,425,907)

(769,894) (3,736,480) (4,846,183) (5,474,857) (6,736,735) (7,668,114)
458,204 834,932 10,149,370 4,762,680 (3,106,181) (9,094,021)

45,408 (146,152) (372,071) (63,328) (88,015) (118,834)
503,612 688,780 9,777,299 4,699,352 (3,194,196) (9,212,855)
62,609,260 75,493,914 102,007,361 110,723,053 124,995,559 146,240,954
27,712,892 39,992,477 55,015,661 59,087,697 76,765,871 99,208,081
475,200 475,200 475,200 475,200 475,200 475,200

34,421,168 35,026,237 46,516,500 51,160,156 47,754,490 46,557,673
34,896,368 35,501,437 46,991,700 51,635,356 48,229,690 47,032,873
- - - - - -
1.79 2.13 2.17 2.14 2.59 3.11

0.90 1.00 11.02 4.42 (2.71) (6.79)
1.46 1.96 23.70 9.53 (6.40) (19.34)
1086 1198 1,235 1,269 1,208 905
321
LOLC HOLDINGS PLC
Summarised Quarterly Statistics
Income Statement - Rs ‘000 2019/20 2018/19

For the 3 months ended 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar
Group
Gross income 45,427,116 50,370,132 50,776,852 37,035,393 38,493,466 40,916,945 44,450,016 38,463,469
Interest income 34,008,885 36,553,766 37,883,758 22,637,748 28,745,355 29,898,988 32,201,044 19,917,048
Interest expense (20,340,498) (21,325,732) (21,652,357) (14,688,054) (15,870,652) (16,831,149) (18,729,157) (13,059,877)
Net interest income 13,668,387 15,228,034 16,231,401 7,949,694 12,874,704 13,067,839 13,471,887 6,857,171
Revenue 5,106,338 6,449,679 6,554,993 6,995,385 4,978,017 5,733,842 6,413,533 7,723,554

Cost of sales (3,469,099) (4,480,013) (4,296,400) (4,948,402) (3,402,283) (4,102,049) (4,280,401) (5,315,360)
Gross profit 1,637,239 1,969,666 2,258,593 2,046,983 1,575,734 1,631,793 2,133,132 2,408,194
Income 4,708,235 5,726,725 4,943,725 3,196,355 3,754,294 4,244,333 4,533,722 4,110,246

Other income/(expenses) 1,603,658 1,639,962 1,394,376 4,205,905 1,015,800 1,039,782 1,301,717 6,712,621
Profit before operating expenses 21,617,519 24,564,387 24,828,095 17,398,937 19,220,532 19,983,747 21,440,458 20,088,232
Other operating expenses (15,129,709) (19,931,367) (20,551,838) (18,490,322) (13,890,628) (15,259,953) (16,534,700) (13,911,170)
Results from operating activities 6,487,810 4,633,020 4,276,257 (1,091,385) 5,329,904 4,723,794 4,905,758 6,177,062
Results on acquisition and divestment of 5,234,707 - - 744,338 - - - -

group investments
Share of profit of associate companies 275,074 329,248 379,847 35,801 209,118 390,025 145,980 363,736
Profit before tax from continuing operations 11,997,591 4,962,268 4,656,104 (311,246) 5,539,022 5,113,819 5,051,738 6,540,798
Income tax expense (2,042,317) (2,099,060) (1,246,024) (768,629) (1,733,072) (1,879,752) (1,559,003) (1,083,792)
Profit for the year from continuing operations 9,955,274 2,863,208 3,410,080 (1,079,875) 3,805,950 3,234,067 3,492,735 5,457,006
Profit/(loss) after tax for the year from - - - 4,639,719 - - - 3,646,182
discontinued operations and assets held for
sale
Profit for the year 9,955,274 2,863,208 3,410,080 3,559,844 3,805,950 3,234,067 3,492,735 9,103,188
Balance Sheets - Rs ‘000 2019/20 2018/19

As at 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar
Group
Assets 1,144,855,978 1,221,164,176 1,278,447,033 1,335,926,194 830,701,380 926,763,112 1,007,372,485 1,043,747,286
Liabilities 955,084,702 1,023,478,776 1,071,060,816 1,123,352,952 708,691,737 797,320,716 869,040,845 891,526,950
Net Assets 189,771,276 197,685,400 207,386,217 212,573,242 122,009,643 129,442,396 138,331,640 152,220,336
Share capital 475,200 475,200 475,200 475,200 475,200 475,200 475,200 475,200
Reserves 97,037,923 84,983,238 90,681,801 93,218,722 71,188,728 87,523,821 91,240,961 85,577,252
Non controlling interest 92,258,153 112,226,962 116,229,216 118,879,320 50,345,715 41,443,375 46,615,479 66,167,884
Share capital,reserves & NCI 189,771,276 197,685,400 207,386,217 212,573,242 122,009,643 129,442,396 138,331,640 152,220,336
322
LOLC HOLDINGS PLC
Income Statement - Rs ‘000 2019/20 2018/19

For the 3 months ended 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar
Company
Gross income 2,609,955 906,264 3,299,043 2,428,531 2,784,747 2,663,818 2,810,537 3,591,521
Interest income 735,656 868,468 969,484 1,330,619 851,029 665,321 620,163 703,251
Interest expense (2,365,652) (2,521,618) (2,739,772) (3,042,663) (1,773,339) (1,905,586) (2,078,653) (2,262,493)
Net interest income (1,629,996) (1,653,150) (1,770,288) (1,712,044) (922,310) (1,240,265) (1,458,490) (1,559,242)
Revenue 434,198 554,342 686,452 805,485 - 482,875 341,195 732,972

Cost of sales (404,933) (494,117) (623,412) (793,337) - (447,073) (306,048) (663,504)
Gross profit 29,265 60,225 63,040 12,148 - 35,802 35,147 69,468
Income 1,239,447 1,173,764 842,112 817,737 955,814 1,115,625 1,336,099 1,244,468

Other income 200,654 (1,690,310) 800,995 (525,310) 977,904 399,997 513,080 910,830
Profit before operating expenses (160,630) (2,109,471) (64,141) (1,407,469) 1,011,408 311,159 425,836 665,524
Other operating expenses (1,355,058) (1,443,292) (1,322,154) (1,231,811) (1,384,470) (1,301,933) (1,445,392) (1,388,314)
Results from operating activities (1,515,688) (3,552,763) (1,386,295) (2,639,280) (373,062) (990,774) (1,019,556) (722,790)
Income tax expense - (29,864) (29,864) (59,106) - (16,745) (20,932) (50,338)

Net profit after tax (1,515,688) (3,582,627) (1,416,159) (2,698,386) (373,062) (1,007,519) (1,040,488) (773,128)
Balance Sheets - Rs ‘000 2019/20 2018/19

As at 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar
Company
Assets 133,625,161 139,272,972 140,945,044 146,240,652 109,163,626 118,120,597 115,651,486 124,995,559
Liabilities 78,251,397 87,440,091 90,497,257 99,170,625 57,942,790 68,070,163 66,627,949 76,765,870
Net Assets 55,373,764 51,832,881 50,447,787 47,070,027 51,220,836 50,050,434 49,023,537 48,229,689
Share capital 475,200 475,200 475,200 475,200 475,200 475,200 475,200 475,200
Reserves 54,898,564 51,357,681 49,972,587 46,594,827 50,745,636 49,575,234 48,548,337 47,754,489
Share capital & reserves 55,373,764 51,832,881 50,447,787 47,070,027 51,220,836 50,050,434 49,023,537 48,229,689
323
LOLC HOLDINGS PLC
Value Addition
2019/20 2018/19
Rs.'000 (%) Rs’000 (%)
Group
Value added
Income 175,333,220 147,888,900
Other income 10,893,585 13,049,490
Cost of borrowing and services (110,792,138) (93,213,439)
Provisions (19,348,265) (14,061,223)
Results on acquisition and divestment of Group investments 5,979,044 -
Share of profits of associate companies 1,019,970 1,108,860
63,085,416 54,772,588
Distribution of value added

To employees
Remuneration and other benefits 28,357,735 45 22,348,210 41
To government
Indirect taxes 2,353,044 4 3,005,131 5
Direct taxes 7,333,305 12 7,181,623 13
To Providers of capital
Dividends to shareholders - - -
Minority interest 8,897,862 14 8,345,285 15
To expansion and growth

Retained profits 10,893,996 17 11,290,652 21
Depreciation and amortisation 5,249,474 8 2,601,687 5
63,085,416 100 54,772,588 100
2019/20 2018/19
Rs.'000 (%) Rs’000 (%)
Company
Value added
Income 8,141,968 7,632,188
Other income (1,213,970) 2,601,812
Cost of borrowing and services (13,944,975) (11,039,244)
Provisions (83,268) 3,788
Value added tax - -
(7,100,245) (801,456)
Distribution of value added

To Employees
Remuneration and other benefits 1,259,400 18 1,666,993 12
To Government
Indirect taxes 1,997 - 59,025 4
Direct taxes 118,834 2 77,451 10
To Providers of Capital
Dividends to shareholders - - - -
Reserves - - - -
To Expansion and Growth

Retained profits (9,212,855) (130) (3,183,632) 48
Depreciation and amortisation 732,379 10 578,707 25
(7,100,245) 100 (801,456) 100
324
LOLC HOLDINGS PLC
Indicative US Dollar Financial Statements
Statement of Financial Position for Information Purposes Only

Group Company
As at 31 March 2020 2019 2020 2019
Note USD.’000 USD.’000 USD.’000 USD.’000
Assets
Cash in hand and favourable bank balances 17.1 297,604 431,971 8,543 5,368
Financial assets recognised through profit or 18 35,197 46,949 1,397 1,622
loss/Trading assets - fair value through profit or loss
Investment securities 19 261,313 531,771 17,293 22,819
Assets directly associated with the assets held for sale and 52 3,340,578 - - -
Financial assets at amortised cost/ Finance lease 20 308,029 319,263 13 19
Financial assets at amortised cost/ Advances and other 21 1,756,719 3,696,394 29,216 14,101
loans
Insurance premium receivables 22 8,115 6,969 - -
Inventories 23 38,218 35,392 2,017 1,936
Current tax assets 24 10,875 8,236 1,054 1,226
Trade and other current assets 25 101,510 130,755 174,927 99,869
Prepaid lease rentals on leasehold properties 26 - 13,659 - -
Right of use assets 27 46,888 - 3,406 -
Investment properties 28 168,184 149,795 5,393 5,429
Biological assets;
Consumable biological assets 29 19,314 21,510 - -
Bearer biological assets 30 11,369 7,153 - -
Subsidiary companies 31 - - 482,144 497,766
Equity Accounted Investees 32 112,722 102,457 22,410 24,493
Deferred tax assets 33.1 6,678 12,057 - 2
Intangible assets 34 19,835 89,867 2,192 2,787
Property, plant and equipment 35 539,312 321,806 25,301 32,241
Total assets 7,082,459 5,926,004 775,306 709,678
325
LOLC HOLDINGS PLC
Indicative US Dollar Financial Statements
Statement of Financial Position for Information Purposes Only

Group Company
2020 2019 2020 2019
As at 31 March

Liabilities
Bank overdrafts 17.2 21,325 59,661 5,511 20,604
Trading liabilities - fair value through profit or loss 36 606 4,778 - -
Liabilities directly associated with the assets held for sale 52 2,830,706 - - -
Financial Liabilities at Amortised Cost/ Deposits liabilities 37 1,171,567 2,566,712 - -
Financial Liabilities at Amortised Cost/ Interest bearing 38 1,712,549 2,142,884 505,837 396,838
borrowings
Insurance provision - life 39.1 22,708 19,637 - -
Insurance provision - general 39.2 23,106 21,113 - -
Current tax payables 40 27,838 34,989 3,501 4,163
Trade and other payables 41 107,837 171,951 7,369 10,205
Deferred tax liabilities 33.3 26,562 30,071 2,041 2,085
Deferred income 42 856 872 - -
Retirement benefit obligations 43 9,810 9,086 1,699 1,953
Total liabilities 5,955,470 5,061,754 525,958 435,848
Equity
Stated capital 44 2,519 2,698 2,519 2,698
Reserves 45 152,634 118,816 56,626 15,402
Retained earnings 46 335,414 367,060 190,203 255,730
Equity attributable to shareholders of the Company 490,568 488,574 249,348 273,830
Non-controlling interests 636,421 375,676 - -
Total equity 1,126,989 864,250 249,348 273,830
Total liabilities & equity 7,082,459 5,926,004 775,306 709,678
Net assets per share (USD.) 1.03 1.03 0.52 0.58

Exchange rate USD/LKR 188.62 176.13 188.62 176.13
This information does not constitute a full set of financial statements in compliance with SLFRS/LKAS. The above should be read together
with the Auditors’ opinion and the notes to the financial statements. Exchange rates prevailing at year end USD/LKR 188.62 (2019 :
176.13) have been used to convert the income statement and statement of financial position.
326
LOLC HOLDINGS PLC
Income Statement for Information Purposes Only

Group Company
As at 31 March 2020 2019 2020 2019
Gross income from continuing operations 4 691,545 705,808 49,007 66,148
Interest Income 4.1 433,947 429,264 20,699 16,123

Interest expenses 6 (290,800) (276,163) (56,566) (45,535)
Net interest income 143,148 153,101 (35,868) (29,412)
Revenue 4.2 132,246 140,837 13,150 8,840

Cost of sales (90,868) (96,922) (12,277) (8,043)
Gross profit 41,378 43,915 873 797
Income 4.3 75,286 77,615 21,594 26,412

Other income/(expenses) 5 50,066 58,091 (6,436) 14,773
Profit before operating expenses 309,877 332,723 (19,837) 12,570
Operating expenses
Direct expenses excluding finance expenses 7 (42,164) (48,067) (23) (335)
Personnel expenses 8 (89,042) (81,548) (6,677) (9,465)
Net impairment loss on financial assets 9 (91,313) (65,102) (441) 22
Depreciation and amortisation 10 (21,863) (12,336) (3,883) (3,286)
Other operating expenses 11 (84,701) (77,746) (17,351) (17,142)
Results from operating activities 12 (19,207) 47,923 (48,213) (17,636)
Share of profits of equity accounted investees, net of tax 13.1 5,407 6,296 - -
Results on acquisition and divestment of Group investments 14 31,698 - - -
Profit/ (loss) before tax expense from continuing operations 17,899 54,219 (48,213) (17,636)
Income tax expense 15 (13,592) (20,534) (630) (406)
Profit/ (loss) for the year from continuing operations 4,307 33,685 (48,843) (18,042)
Profit/(loss) after tax for the year from discontinued operations 100,621 77,801 - -
and assets held for sale
Profit/ (loss) for the year 104,928 111,485 (48,843) (18,042)
Profit/ (loss) attributable to; (Continuing operations)

Equity holders of the company 21,881 34,350 (48,843) (18,042)
Non-controlling interests (17,574) (665) - -
4,307 33,685 (48,843) (18,042)
Profit attributable to; (Discontinued operations)

Equity holders of the Company 35,874 29,754 - -
100,621 77,801 - -
Profit attributable to;

Equity holders of the Company 57,755 64,104 (48,843) (18,042)
104,928 111,485 (48,843) (18,042)
Basic earnings per share (USD.) 0.12 0.13 (0.10) (0.04)

Exchange rate USD/LKR 188.62 176.13 188.62 176.13
This information does not constitute a full set of financial statements in compliance with SLFRS/LKAS. The above should be read together
with the Auditors’ opinion and the notes to the financial statements. Exchange rates prevailing at year end USD/LKR 188.62 (2019 :
176.13) have been used to convert the income statement and statement of financial position
327
LOLC HOLDINGS PLC
List of Group Companies
Company Director/s
LOLC Holdings PLC I C Nanayakkara

W D K Jayawardena
Mrs. K U Amarasinghe
F K C P N Dias
M D D Pieris
Dr. R A Fernando
LOLC Finance PLC B C G de Zylva
F K C P N Dias
A Nissanka
Mrs. D P Pieris
P A Wijeratne
K Sundararaj
Commercial Leasing & Finance PLC P D J Fernando
D M D K Thilakaratne
L Jayarathne
U H E Silva
T Sanakan
LOLC Life Assurance Ltd Mrs. K U Amarasinghe
Dr. Mrs. N Nanayakkara
A J L Peiris
LOLC General Insurance Ltd W D K Jayawardena
Mrs. V G S S Kotakadeniya
W R A Dharmarathne
LOLC Securities Ltd W D K Jayawardena
S Gurusinghe
K A K P Gunawardena
Dr. J M Swaminathan
LOLC Factors Ltd K A K P Gunawardena
J B W Kelegama
LOLC Investments Ltd K A K P Gunawardena
J B W Kelegama
P D G Jayasena
LOLC Development Finance PLC W D K Jayawardena
W A R Kumara
A J L Peiris
W R A Dharmarathne
T Dharmarajah
Browns Hotels and Resorts Ltd K A K P Gunawardena
J B W Kelegama
D S K Amarasekera
Browns Leisure (Pvt) Ltd K A K P Gunawardena
T Sanakan
Eden Hotels Lanka PLC W D K Jayawardena
D S K Amarasekera
M T A Furkhan
S Furkhan
Dr. J M Swaminathan
328
LOLC HOLDINGS PLC
Company Director/s
Palm Garden Hotels PLC W D K Jayawardena

D S K Amarasekera
Dr. J M Swaminathan
LOLC Asset Holdings Ltd K A K P Gunawardena
J B W Kelegama
LOLC Technology Services Ltd F K C P N Dias
K A K P Gunawardena
J B W Kelegama
LOLC Technologies Ltd F K C P N Dias
K A K P Gunawardena
J B W Kelegama
LOLC Eco Solutions Ltd K A K P Gunawardena
P D G Jayasena
J B W Kelegama
United Dendro Energy Walawewatte (Pvt) Ltd K A K P Gunawardena
P D G Jayasena
United Dendro Energy Ambalantota (Pvt) Ltd K A K P Gunawardena
P D G Jayasena
Thurushakthi (Pvt) Ltd K A K P Gunawardena
P D G Jayasena
Sundaya Lanka (Pvt) Ltd M R Adema
K A K P Gunawardena
J B W Kelegama
LOLC Motors Ltd K A K P Gunawardena
P D G Jayasena
Dickwella Resorts (Pvt) Ltd K A K P Gunawardena
J B W Kelegama
P D G Jayasena
Tropical Villas (Pvt) Ltd D S K Amarasekera
K A K P Gunawardena
J B W Kelegama
Riverina Resorts (Pvt) Ltd W D K Jayawardena
D S K Amarasekera
K A K P Gunawardena
Commercial Factors (Pvt) Ltd K A K P Gunawardena
D M D K Thilakaratne
J B W Kelegama
LOLC Capital One (Pvt) Ltd K A K P Gunawardena
J B W Kelegama
S Gurusinghe
B D T R Perera
LOLC Corporate Services (Pvt) Ltd K A K P Gunawardena
Mrs. R T Seneviratne
Mrs. J K Vaas
329
LOLC HOLDINGS PLC
Company Director/s
East Coast Land Holdings (Pvt) Ltd K A K P Gunawardena

P D G Jayasena
J B W Kelegama
Prospere Realty (Pvt) Ltd K A K P Gunawardena
P D G Jayasena
J B W Kelegama
Green Orchard Property Investments (Pvt) Ltd K A K P Gunawardena
P D G Jayasena
J B W Kelegama
Eagle Recoveries (Pvt) Ltd K A K P Gunawardena
P D G Jayasena
J B W Kelegama
I Pay (Pvt) Ltd K A K P Gunawardena
P D G Jayasena
J B W Kelegama
F K C P N Dias
Diriya Investments (Pvt) Ltd Mrs. R N A Nanayakkara
K A K P Gunawardena
LOLC Property One (Pvt) Ltd K A K P Gunawardena
LOLC Property Two (Pvt) Ltd K A K P Gunawardena
LOLC Property Three (Pvt) Ltd K A K P Gunawardena
LOLC Property Four (Pvt) Ltd K A K P Gunawardena
LOLC Property Five (Pvt) Ltd K A K P Gunawardena
LOLC Property Six (Pvt) Ltd K A K P Gunawardena
LOLC Property Seven (Pvt) Ltd K A K P Gunawardena
LOLC Property Eight (Pvt) Ltd K A K P Gunawardena
LOLC Eco Technologies (Pvt) Ltd K A K P Gunawardena
LOLC Ceylon Holdings (Pvt) Ltd K A K P Gunawardena
Ceylon Graphene Technologies (Pvt) Ltd I C Nanayakkara
W D K Jayawardena
D W Batagoda
M S Gunawardana
K A K P Gunawardena
Dr. A M Mubarak
R M S J Gunasekera
H N Jayaweera
LOLC Advanced Technologies (Pvt) Ltd I C Nanayakkara
A Hettiarachchy
W D K Jayawardena
M S Gunawardana
K A K P Gunawardena
W K D T Abeyrathne
LOLC Geo Technologies (Pvt) Ltd I C Nanayakkara
M S Gunawardana
K A K P Gunawardena
P Weerasinghe
R R B Wadugodapitiya
330
LOLC HOLDINGS PLC
Company Director/s
LOLC Serendib (Pvt) Ltd K A K P Gunawardena

J B W Kelegama
LOLC Capital (Pvt) Ltd I C Nanayakkara
Leapstitch Technologies (Pvt) Ltd W D K Jayawardena
K A K P Gunawardena
D R Samaraweera
I I I Mohamed
S Adikari
S S B Dissanayake
P B I Somarathna
Brown & Company PLC I C Nanayakkara
H P J De Silva
W D K Jayawardena
T Bandaranayake
Associated Battery Manufacturers A Mittal
Ceylon Ltd A K Mukherjee
S Arnab
M Ramachandran
T Sanakan
M S Gunawardena
I C Nanayakkara
S.F.L.Services (Pvt) Ltd Mrs. R L Nanayakkara
K A K P Gunawardena
Engineering Services (Pvt) Ltd Mrs. R L Nanayakkara
K A K P Gunawardena
Masons Mixture Ltd Mrs. R L Nanayakkara
K A K P Gunawardena
Browns Group Motels Ltd Mrs. R L Nanayakkara
K A K P Gunawardena
C.F.T. Engineering Ltd Mrs. R L Nanayakkara
K A K P Gunawardena
Browns Group Industries (Pvt) Ltd Mrs. R L Nanayakkara
K A K P Gunawardena
The Hatton Transport And Agency Mrs. R L Nanayakkara
Company (Pvt) Ltd K A K P Gunawardena
Walker & Greig (Pvt) Ltd Mrs. R L Nanayakkara
K A K P Gunawardena
Browns Investments PLC I C Nanayakkara
D S K Amarasekera
S Furkhan
W D K Jayawardena
J M Swaminathan
Klevenberg (Pvt) Ltd K A K P Gunawardena
T Sanakan
Sifang Lanka Trading (Pvt) Ltd Mrs. R L Nanayakkara
Mrs. R N A Nanayakkara
331
LOLC HOLDINGS PLC
Company Director/s
Sifang Lanka (Pvt) Ltd Mrs. R L Nanayakkara

K A K P Gunawardena
Galoya Holdings (Pvt) Ltd K A K P Gunawardena
D. Abeyrathne
S G Kalidasa
A. Kavitha
Galoya Plantations (Pvt) Ltd M Wijesekera
K A K P Gunawardena
D Abeyrathne
W Batagoda
L Bandaranayake
Lt.Col. R Ellegala
Ms. S Hettiarachchi
I M U P Jayamaha
K B Kotagama
Browns Thermal Engineering (Pvt) Ltd Mrs. R L Nanayakkara
D Fernando
A K D Munidasa
Browns Health Care Negombo (Pvt) Ltd K A K P Gunawardena
T Sanakan
Browns Industrial Park Ltd Mrs. R L Nanayakkara
K A K P Gunawardena
Snowcem Products Lanka (Pvt) Ltd K A K P Gunawardena
T Sanakan
Browns Holdings Ltd Mrs. K U Amarasinghe
K A K P Gunawardena
Browns Pharma Ltd T Sanakan
M S Gunawardena
Browns Agri Solutions (Pvt) Ltd K A K P Gunawardena
D Abeyrathne
M S Gunawardena
Browns Pharmaceuticals Ltd T Sanakan
M Wijesinghe
Browns Tours (Pvt) Ltd Mrs. R N A Nanayakkara
D S K Amarasekera
P A D F Perera
S A N Perera
B.G. Air Services (Pvt) Ltd K A K P Gunawardena
D S K Amarasekera
Samudra Beach Resorts (Pvt) Ltd D S K Amarasekera
R L Nanayakkara
K A K P Gunawardena
Millennium Development (Pvt) Ltd D S K Amarasekera
K A K P Gunawardena
E C Wijeratne
Excel Global Holdings (Pvt) Ltd D S K Amarasekera
K A K P Gunawardena
332
LOLC HOLDINGS PLC
Company Director/s
Taprobane Plantations Ltd Mrs. R N A Nanayakkara

Mrs. M S Rohini Jayaweera
Excel Restaurants (Pvt) Ltd D S K Amarasekera
K A K P Gunawardena
E C Wijeratne
Ajax Engineers (Pvt) Ltd D S K Amarasekera
V Kumarasinghe
V Gunarathne
Green Paradise (Pvt) Ltd D S K Amarasekera
K A K P Gunawardena
Sun & Fun Resorts Ltd K A K P Gunawardena
V K Vemuru
D S K Amarasekera
C Melappatti
T Selviah
Creations Wooden Fabricators (Pvt) Ltd A P Weeratunga
K A K P Gunawardena
D S K Amarasekera
V S Kumarasinghe
Browns Global Farm (Pvt) Ltd D S K Amarasekera
K A K P Gunawardena
B I Commodities and Logistics (Pvt) Ltd D S K Amarasekera
K A K P Gunawardena
G Jayasena
D Abeyrathne
M S Gunawardena
A A G Vithanage
BI Zhongtian Holdings (Pvt) Ltd D S K Amarasekera
K A K P Gunawardena
W Zhong Feng
W Zhong Shan
Ceylon Roots Lanka (Pvt) Ltd K A K P Gunawardena
D S K Amarasekera
S A Nishantha Perera
P A D F Perera
Browns Teas (Pvt) Ltd D S K Amarasekera
K A K P Gunawardena
K G Punchihewa
Browns Metal & Sands (Pvt) Ltd D S K Amarasekera
K A K P Gunawardena
K G Punchihewa
333
LOLC HOLDINGS PLC
Company Director/s
Browns Engineering and Construction (Pvt) Ltd Mrs. V G S S Kotakadeniya

K A K P Gunawardena
J K Pathirena
General Accessories and Coating (Pvt) Ltd K A K P Gunawardena
D S K Amarasekera
F L P C Management (Pvt) Ltd. K A K P Gunawardena
D S K Amarasekera
Browns Power Holdings (Pvt) Ltd K A K P Gunawardena
D S K Amarasekera
Browns Properties (Pvt) Ltd K A K P Gunawardena
D S K Amarasekera
Maturata Plantations Ltd K A K P Gunawardena
D S K Amarasekera
M J R Puviraj
K B Kotagama
Sagasolar Power (Pvt) Ltd A S K Vidanagamage
P D R Hettiaratchi
A Raheja
D S K Amarasekera
P Weerasinghe
Bodufaru Beach Resorts (Pvt) Ltd D S K Amarasekera
K A K P Gunawardena
M Niham
Browns Ari Resort (Pvt) Ltd D S K Amarasekera
K A K P Gunawardena
I C Nanayakkara
M Niham
S Mohmed
Browns Kaafu N Resort (Pvt) Ltd D S K Amarasekera
I C Nanayakkara
O A Razzak
Browns Machinery (Cambodia) Co. Ltd B De Zylva
D Samaraweera
Browns Raa Resort (Pvt) Ltd D S K Amarasekera
K A K P Gunawardena
I C Nanayakkara
M Niham
LOLC Asia (Pvt) Ltd I C Nanayakkara
W D K Jayawardena
K A K P Gunawardena
N S M Doreen
334
LOLC HOLDINGS PLC
Company Director/s
LOLC (Pvt) Ltd I C Nanayakkara

W D K Jayawardena
K A K P Gunawardena
N S M Doreen
LOLC Cambodia PLC B De Zylva
D Samaraweera
F K C P N Dias
M Moormann
I Wijesiriwardana
LOLC International (Pvt) Ltd I C Nanayakkara
W D K Jayawardena
N S M Doreen
LOLC Myanmar Micro-Finance Co. Ltd I C Nanayakkara
B De Zylva
F K C P N Dias
K Thilakeratne
D Samaraweera
NPH Investment (Pvt) Ltd A Niman
I Mohamed
D S K Amarasekera
K A K P Gunawardena
S S Kotakadeniya
T S Selviah
Pak Oman Micro Finance Bank Ltd Y Bin S B A Al-Jabri
I C Nanayakkara
J J S Al Said
H Y J Al Zadjali
R Kumara
B Khan
A S Abbasi
R Ghani
T Kisat
PRASAC Micro Finance Institution Ltd J K Sang
K H Kook
L Hana
B S Pheakdey
I C Nanayakkara
M B Hong
S Senacheert
K H Soo
J J Kyu
PT LOLC Management Indonesia I Mutyara
M Sabharwal
R Kumara
S Refai
F K C P N Dias
S Jesudasan
M Irham
G S Kalidasa
335
LOLC HOLDINGS PLC
Company Director/s
PT Sarana Sumut Ventura I Mutyara

I C Nanayakkara
M Sabharwal
F F Mutyara
F K C P N Dias
R Kumara
S Refai
A Thosin
S Jesudasan
LOLC Africa Holdings Private Limited I C Nanayakkara
W D K Jayawardena
K A K P Gunawardena
N S M Doreen
LOLC Financial Sector Holdings Private Limited S G Kalidasa
K A K P Gunawardena
N S M Doreen
LOLC Mauritius Holdings Limited I C Nanayakkara
K A K P Gunawardena
J Clarisse
N Maharahaje
LOLC Mekong Holdings Private Limited N S M Doreen
K A K P Gunawardena
LOLC Finance Zambia Limited I C Nanayakkara
A Nissanka
E Jayathileke
S B Chilonga
C M Chiluba
W Nhekaoro
Grey Reach Investment Limited I C Nanayakkara
D S K Amarasekara
K A K P Gunawardena
D Abeyrathne
D Kohli
R Bennet
L D Nguyen
Sunbird Bioenergy Limited I C Nanayakkara
D S K Amarasekara
D Abeyrathne
D Kohli
R Bennet
B Commodities ME (FZE) BI Commodites and Logistics (Private)
Limited
336
LOLC HOLDINGS PLC
Share Distribution
SHAREHOLDING AS AT 31ST MARCH
2020 2019
Range No. of No. of Shares % No. of No. of Shares %

Shareholders Shareholders
1 - 1,000 2,130 655,036 0.14 1,837 594,505 0.13

1,001 - 10,000 827 3,192,774 0.67 675 2,616,670 0.55
10,001 - 100,000 272 8,518,399 1.79 264 8,384,744 1.76
100,001 - 1,000,000 44 13,580,721 2.86 42 11,635,840 2.45
Over 1,000,000 11 499,253,070 94.54 12 451,968,241 95.11
3,284 475,200,000 100.00 2,830 475,200,000 100.00
CATEGORIES OF SHAREHOLDERS AS AT 31ST MARCH
2020 2019
Range No. of No. of Shares % No. of No. of Shares %

Shareholders Shareholders
Local Individuals 2,970 135,408,376 28.49 2,571 136,167,271 28.65

Local Institutions 261 319,845,243 67.31 211 318,172,032 66.96
Foreign Individuals 43 614,951 0.13 37 502,329 0.11
Foreign Institutions 10 19,331,430 4.07 11 20,358,368 4.28
3,284 475,200,000 100.00 2,830 475,200,000 100.00
SHARE PRICES FOR THE YEAR AS AT 31ST MARCH
2020 2019
(Rs.) (Rs.)
Market price per share

Highest during the year 194.90 138.00
Lowest during the year 86.00 82.40
Last Traded as at end of the year 90.80 88.90
PUBLIC HOLDING AS AT 31ST MARCH
2020 2019
(Rs.) (Rs.)
The percentage of shares held by the public (%) 15.10 15.31

Number of Shareholders that represent above percentage 3,277 2,817
Float adjusted Market Capitalisation (Rs.) 6,517,043,334.00 6,469,573,484.50
The Company complies with the Minimum Public Holding Requirement under the Option 3 of the Colombo Stock Exchange Listing
Rule 7.13.1 (a)
337
LOLC HOLDINGS PLC
Annual Report 2019/20 Share Distribution
TWENTY LARGEST SHAREHOLDERS OF THE COMPANY AS AT 31ST MARCH
2020 2019
No. of Shares % of Issued Capital No. of Shares % of Issued Capital
1 LOLC Capital (Private) Limited 147,265,983 30.99 146,265,983 30.78

2 I C Nanayakkara 91,613,792 19.28 91,613,792 19.28
3 Commercial Bank of Ceylon PLC/ I C 79,000,000 16.62 79,000,000 16.62
Nanayakkara
4 Sampath Bank PLC/ I C Nanayakkara 61,774,000 13.00 61,774,000 13.00
5 Mrs K U Amarasinghe 23,760,000 5.00 23,760,000 5.00
6 Employees Provident Fund 15,182,259 3.19 15,182,259 3.19
7 BBH- Matthews International Funds- 11,399,052 2.40 12,121,473 2.55
Matthews Asia Growth Fund
8 Kashyapa Capital (Private) Limited 8,671,625 1.82 8,671,625 1.82
9 BBH- Matthews Emerging Asia Fund 6,627,893 1.39 7,511,241 1.58
10 Mrs. I Nanayakkara 2,827,948 0.60 2,827,948 0.60
11 J B Cocoshell (Pvt) Ltd 1,130,518 0.24 1,529,920 0.32
12 GF Capital Global Limited 943,404 0.20 378,675 0.08
13 Mrs. S N Fernando 818,440 0.17 818,440 0.17
14 Swastika Mills Ltd 735,000 0.15 985,703 0.21
15 Dr. M Ponnambalam 722,616 0.15 772,616 0.15
16 Seylan Bank PLC/W D N H Perera 622,992 0.14 Nil Nil
17 G G Ponnambalam 661,818 0.14 716,818 0.15
18 Hatton National Bank PLC/Capital 545,158 0.11 325,104 0.07
Trust Holdings Limited
19 R C De Silva 524,200 0.11 1,710,000 0.36
20 R Maheswaran 500,000 0.11 500,000 0.11
455,366,698 95.83 456,415,597 96.05
Others 19,833,302 4.17 18,784,403 3.95
Total 475,200,000 100.00 475,200,000 100.00
338
LOLC HOLDINGS PLC
Notes
339
LOLC HOLDINGS PLC
Annual Report 2019/20 Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT THE 6. To approve in terms of Companies b) By deleting the existing Article 68 in
41ST ANNUAL GENERAL MEETING of (Donations) Act No. 26 of 1951 the its entirety and substituting therein the
the Company will be held on Friday, 27th making of donations by the Directors following:
November at 10.30 a.m. as an on-line as determined by them for the current
audio-visual meeting with arrangements Financial Year and until the next Annual “68 Votes of Shareholders
for the on-line meeting platform made at General Meeting of the Company. Subject to any rights or restrictions for
the registered office of the Company at the time being attached to any class
No.100/1, Sri Jayawardenapura Mawatha, 7. To approve by Special Resolution or classes of shares, on a show of
Rajagiriya, for the following purposes: the amendments to the Articles of hands every Shareholder who (being
Association: an individual) is present in person
1. To receive and consider the Report or by proxy or attorney who is not a
of the Directors and Statement of a) By deleting the existing Article 59 in Shareholder or (being a corporation)
Accounts for the year ended 31st its entirety and substituting therein the is present by a representative or proxy
March 2020 with the Report of the following: or attorney who is not a Shareholder,
Auditors thereon. shall have one vote. In the case
“59 Proceedings at General Meetings
of a meeting of shareholders held
2. To re-elect as a Director Mrs. K U (1) A meeting of shareholders may
under Article 59 (3) b), unless a poll
Amarasinghe who retires by rotation in determine its own procedure, to
is demanded, voting at the meeting
terms of Article 88 (i) of the Articles of the extent that it is not governed by
shall be by shareholders signifying
Association of the Company. these articles.
individually their assent or dissent by
(2) No business shall be transacted voice. Subject as aforesaid upon a poll
3. To re-elect as a Director Mr. F K C P
at any General Meetings unless every Shareholder who participates in
N Dias who retires in terms of Article
a quorum is present when the person or by proxy or by attorney or
95 of the Articles of Association of the
meeting proceeds to business. Three by representative shall be entitled to
Company.
shareholders present in person or one vote for each share held.”
4. To re-elect as a Director Deshamanya by proxy or attorney or (in the case
By order of the Board
M D D Pieris, who retires in terms of of a corporation) by authorised
LOLC HOLDINGS PLC
Section 210 of the Companies Act No. representative shall be a quorum for
7 of 2007. Special Notice has been all purposes.
received from a shareholder of the
intention to pass a resolution which (3) A meeting of shareholders may be
is set out below in relation to his re- held either—
election LOLC Corporate Services (Private)
(a) by a number of shareholders Limited
“Resolved that Deshamanya M D D who constitute a quorum, being Secretaries
Pieris who reached the age of 70 years assembled together at the place,
in 2007, be and is hereby re-elected a date and time appointed for the 4th November 2020
Director of the company and it is further meeting; or Rajagiriya (in the greater Colombo)
specifically declared that the age limit
(b) by means of audio, or audio and
of 70 years referred to in Section 210
visual communication by which
of the Companies Act No. 7 of 2007
all shareholders participating
shall not apply to the said Director,
and constituting a quorum, can
Deshamanya M D D Pieris.”
simultaneously hear each other
5. To re-appoint M/s Ernst and Young throughout the meeting.”
Chartered Accountants as auditors
for the ensuing financial year at a
remuneration to be fixed by the
Directors.
340
LOLC HOLDINGS PLC
Form of Proxy
I/We ...............................................................................................................................................................................................................
holder of NIC/ Reg. No. ..................................................................................................of ............................................................................
being a member/members of LOLC Holdings PLC hereby appoint ….………………………..........................................……………....………
of…………………….................…………………………………………………….…whom failing
Mr. I C Nanayakkara of Colombo or failing him

Mr. W D K Jayawardena of Colombo or failing him
Mrs. K U Amarasinghe of Colombo or failing her
Mr. F K C P N Dias of Colombo or failing him
Deshamannya M D D Pieris of Colombo or failing him
Dr. R A Fernando of Colombo
as my/our proxy to represent me/us and vote on my/our behalf at the Annual General Meeting of the Company to be held as an on-
line meeting on Friday, 27th November 2020 at 10.30 a.m. and at any adjournment thereof and at every poll which may be taken in
consequence of the aforesaid Meeting.
For Against
1) To re-elect as a Director Mrs. K U Amarasinghe who retires by rotation terms of Article 88 (i)
of the Articles of Association of the Company.
2) To re-elect as a Director Mr. F K C P N Dias who retires in terms of Article 95 of the Articles of
Association of the Company.
3) To re-elect as a Director Deshamanya M D D Pieris, who retires in terms of Section 210 of

the Companies Act No. 7 of 2007.
4) To re-appoint M/s Ernst and Young Chartered Accountants as auditors for the ensuing
financial year at a remuneration to be fixed by the Directors.
5) To authorise the Directors to make donations.
6) To approve by Special Resolution the amendments to the Company’s Articles of Association

as set out in the Notice of Meeting.
dated this ............................................................ day of ..................................... Two Thousand Twenty.
............................................
Signature of Shareholder
(Please delete inappropriate words and refer overleaf for instructions)
341
LOLC HOLDINGS PLC
Annual Report 2019/20 Form of Proxy
INSTRUCTIONS AS TO COMPLETION
1 Please return the completed Form of Proxy after filling in legibly your full name and address, signing on the space provided and filling
in the date of signature.
2 The Proxy shall
a) in the case of an individual, be under the hand of the shareholder or his or her attorney, and if signed by an attorney, a notarially
certified copy of the Power of Attorney should be attached to the completed Proxy if it has not already been registered with the
Company.
b) if the shareholder is a company or a corporation, be either under its common seal or under the hand of an officer or attorney
authorised by such organisation in that behalf in accordance with its Articles of Association or Constitution.
3 Please indicate with an ‘X’ how the proxy should vote on each Resolution. If no indication is given, the proxy shall exercise his/
her discretion and vote as he/she thinks fit.
4 The completed Form of Proxy should be deposited at the registered office of the Company No: 100/1, Sri Jayawardenapura
Mawatha, Rajagiriya or scanned and emailed to corporateservices@lolc.com with the email subject titled “LOLC AGM PROXY”
not less than 48 hours before the time appointed for the holding of the Meeting.
342
Corporate Information
NAME OF THE COMPANY Kalsha Upeka Amarasinghe COMPANY SECRETARIES

L O L C HOLDINGS PLC Executive Director LOLC Corporate Services
(Private) Limited
COUNTRY OF INCORPORATION Francisco Kankanamalage Conrad
No. 100/1, Sri Jayewardenepura Mawatha,
Prasad Niroshan Dias
Sri Lanka Rajagiriya, Sri Lanka
Non-Executive Director
Telephone: 011-5880880, 011-5880358
DATE OF INCORPORATION Deshamannya Minuwanpitiyage
14th March 1980 Dharmasiri Dayananda Pieris AUDITORS
Independent Director Ernst & Young,
LEGAL FORM Chartered Accountants
A quoted public company with limited Dr. Ravindra Ajith Fernando
liability. Independent Director LAWYERS
Julius & Creasy
COMPANY REGISTRATION NO. BOARD SUB COMMITTEES Nithya Partners
PQ 70 Audit Committee
M D D Pieris - Committee Chairman REGISTRARS
PRINCIPAL ACTIVITIES Dr. R A Fernando P.W. Corporate Secretarial (Pvt) Ltd.
Monitoring and managing the Group’s F K C P N Dias No. 3/17 Kynsey Road, Colombo 8,
investments and providing centralised Sri Lanka
Talent Development and Remuneration
support services to its subsidiaries and Tel: 011-4897733-5
Committee
associates.
Dr. R A Fernando - Committee Chairman
BANKERS
M D D Pieris
STOCK EXCHANGE LISTING Bank of Ceylon
The ordinary shares of the Company are Related Party Transactions Review Citi Bank N A
listed on the Colombo Stock Exchange of Committee Hatton National Bank PLC
Sri Lanka. M D D Pieris - Committee Chairman
Hongkong & Shanghai Banking Corporation
W D K Jayawardena
REGISTERED OFFICE F K C P N Dias Deutsche Bank AG
100/1, Sri Jayewardenepura Mawatha, Cargills Bank Ltd
Rajagiriya, Sri Lanka. Corporate Governance Committee
Nations Trust Bank PLC
M D D Pieris - Committee Chairman
W D K Jayawardena Commercial Bank of Ceylon PLC
HEAD OFFICE
Mrs. K U Amarasinghe NDB Bank PLC
No. 100/1, Sri Jayewardenepura Mawatha,
Rajagiriya, Sri Lanka Sampath Bank PLC
Integrated Risk Management Committee
Telephone: 011-5880880 M D D Pieris - Committee Chairman Seylan Bank PLC
Fax: 011-2865606 (Gen) W D K Jayawardena Union Bank PLC
Website: www.lolc.com F K C P N Dias MCB Bank
Mrs. S Wickremasekera
DIRECTORS Pan Asia Banking Corporation PLC
Mrs. S Kotakadeniya
Ishara Chinthaka Nanayakkara K A K P Gunawardena
Executive Deputy Chairman B D T R Perera
J B W Kelegama
Waduthantri Dharshan Kapila
P Uluwaduge
Jayawardena
P Pathirana
Managing Director / Group CEO
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ANNUAL

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29 Financial Services 38 Agriculture

46 Construction 49 Manufacturing 52 Overseas Expansion 57 Investments

About us 3 Report of the Integrated

This year, LOLC achieved numerous awards and accolades for

LankaPay International Business LankaPay

IFN Best Islamic Bank IFN Best Islamic Provider

LOLC’s achievement as a partner in uplifting communities was made possible by its

LOLC Finance Footprint Browns

LOLC Finance, Al-Falaah Centres LOLC Development Finance, Branches and

Commercial Leasing & Finance (CLC)

The reason for my optimism

followed by the Presidential Elections

The damage wreaked by the then

a sustainable social impact. Our success A POSITIVE OUTLOOK

Considering the global

Growth of credit to the private sector

PERFORMANCE OF LOLC’S LOCAL

Mr. I C Nanayakkara Mr. W D K Jayawardena

Mrs. K U Amarasinghe Mr. Conrad Dias

Dr. R A Fernando Deshamanya M D D Pieris

Conference on constitutional reform. He contributed articles to several

Desamanya Pieris also lectures from time to

He has delivered four convocation

He has written the foreword to several

companies providing various services. economic conditions. Furthermore, the

asset base. Having originated as a leasing pandemic, resulting in financial sector

financial position. Myanmar, Indonesia, Philippines and

Financial Review Deposits (Rs. Mn.) Income (Rs. Mn.)

Due to the slowdown of credit growth 0 0

Despite above, the management remain

During the year the loss related to leisure

This performance was strongly supported by an experienced

for daily hires. The business unit derives

LOLC Motors is a workshop for automobile

The company has been a reliable employee

The outlook for Browns agriculture remains positive, given

Browns Hotels & Resorts managed to surge in the market

This strategic move by Excel Restaurants CEYLON ROOTS (PVT) LTD. –

In addition to traditional marketing

The company also successfully launched

The company/Ceylon Roots hopes to

Despite current challenges faced by the

The company will proceed prudently and will continue to seek

The company is in the process of

Browns Engineering aims to improve its market share in the

System Engineering Projects

• Supply of Spares for Dehiattakandiya

• Construction of a Pump House and

• Supply, delivery and installation of multi

Projects in the Pipeline to be awarded

• Rehabilitation/ improvement and

• Rehabilitation/ improvement and

• Rehabilitation/ improvement and

Browns battery division will add new batteries to its portfolio

BATTERY DIVISION The world’s first ever graphene-applied VETERINARY PHARMACEUTICALS

During 2019/20, LOLC (Cambodia) achieved many major

The LOLC Group has gained impressive momentum with

contractors and service providers led