Annual Report of the Board of Directors

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The Report has been structured to present a balanced and comprehensive assessment of our financial, social, and environmental impacts resulting from our value-creating activities and includes the Financial Statements of the Company, which are duly certified by the Chief Financial Officer and approved by the Audit Committee and the Board of Directors and signed by the Chairman and the Managing Director as per the requirements of the Companies Act No. 07 of 2007.

The Directors are responsible for the preparation of the Financial Statements of the Company and for ensuring the Financial Statements have been presented in accordance with the Sri Lanka Accounting Standards. Furthermore, the Directors are responsible to provide the information required by the Companies Act No. 07 of 2007 and Finance Business Act No. 42 of 2011. The Directors are of the view that the Financial Statements appearing on pages 174 to 276 have been prepared in conformity with the requirements of the Sri Lanka Accounting Standards (LKASs and SLFRSs) as issued under the Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995, the Companies Act No. 07 of 2007 and the Finance Business Act No. 42 of 2011 and amendments thereto. The Statement of Directors’ Responsibility for Financial Reporting forms an integral part of this Report.

As required by the Section 168 (1) (h) of the Companies Act No. 07 of 2007, the names of the persons holding office as Directors of the Company at the reporting date and the names of persons who ceased to hold office as Directors of the Company during the year are given on pages 126 to 127 of this Annual Report. As mandated under Section 223 (1) of the Companies Act, the Company maintains a Register of Directors and Secretaries which contains information of each Director and the Secretary.

This Report, where applicable, is presented in accordance with the Guiding Principles and Content Elements as stipulated by the International <IR> Framework issued by the International Integrated Reporting Council (IIRC), now known as the Value Reporting Foundation consequent to the merger with the Sustainability Accounting Standards Board in June 2021. This report provides information about our financial and non-financial performance for the year in review, including our risk management, corporate governance practices and provides forward-looking information in terms of our short-, medium- and long-term strategic outlook, highlighting the material relationships between stakeholders and strategy that form the basis of our value-creation process. Due consideration has been given to sustainability reporting principles including Stakeholder Inclusiveness, Sustainability Context, Materiality and Completeness in determining the report content.

Having reviewed the Company’s business plans, the Board of Directors is satisfied that CDB has adequate resources to continue its operations in the foreseeable future. The Report explains how the Company has created value during the year under review, and provides a well-rounded appreciation of the state of operations, instilling confidence in the stakeholders in the Company’s prospects for future growth and sustainability.

Reporting period and boundary

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The Report covers the operations and financial reports of Citizens Development Business Finance PLC identified as “CDB” or the “Company”.

The Report covers the period from 1 April 2021 to 31 March 2022, which is consistent with our usual annual reporting cycle. The key financial aspects are discussed in the context of the Company while non-financial aspects are discussed in the context of the Company unless stated otherwise. Our most recent report for the year ended 31 March 2021 is available on our website: http://www.cdb.lk.

Key frameworks and compliance

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CDB’s social and environmental impacts are presented in accordance with the Consolidated GRI Standards: Core Option. The following laws, regulatory frameworks, standards, guidelines and protocols have been followed in the preparation of this Report.

• The IIRC Framework (www.theiirc.org)
• Sri Lanka Accounting Standards issued by The Institute of Chartered Accountants of Sri Lanka (ICASL)
• Guidelines for preparation of Annual Reports 2022, published by The Institute of Chartered Accountants of Sri Lanka (ICASL)
• A Preparer’s Guide to Integrated Corporate Reporting, published by The Institute of Chartered Accountants of Sri Lanka (ICASL)
• Sustainable Development Goals (SDGs) – The UN initiative with 17 aspirational “Global Goals”
• Smart Media Methodology^TM for Integrated Reporting

The Financial Statements of the Company, which reflect a true and fair view of the financial position and performance of the Company has been prepared and presented in compliance and conformity with the requirements of the Sri Lanka Accounting Standards as mandated by the Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995 and the Companies Act No. 07 of 2007 and amendments thereto, and the Listing Rules of the Colombo Stock Exchange (CSE) including the Rules pertaining to Related Party Transactions as required by Section 9.3.2 (c) and (d) thereof and the recommended best practice. In this regard, the Board of Directors wishes to confirm that the Income Statement, Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows, and Significant Accounting Policies and Notes thereto appearing on pages 174 to 276 have been prepared and presented in conformity with the requirements of the Sri Lanka Accounting Standards as mandated by the Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995 and the Companies Act No. 07 of 2007 and amendments thereto.

The Directors, to the best of their knowledge and belief, are satisfied that all statutory payments to the Government, other regulatory institutions, and to employees have been made in time. The Board of Directors reviewed the business plans of the Company and is satisfied that the Company has adequate resources to continue their operations in the foreseeable future. Accordingly, the Financial Statements of the Company is prepared based on a going concern basis.

Having carefully considered matters material to the Company and its stakeholders in preparing this Report, the Board acknowledges that reasonable care has been exercised in the preparation and presentation of this Integrated Annual Report while preserving its integrity. The extent of compliance with the requirements of Section 168 of the Companies Act No. 7 of 2007 and amendments thereto and other relevant statutes is disclosed in detail on pages 4 to 7. The Board wishes to confirm that the Company has prepared the Annual Report in time as required by Section 166 (1) and 167 (1) of the Companies Act. The Financial Statements of the Company for the year ended 31 March 2022, including comparatives for 2021, were approved and authorised for issue by the Board of Directors in accordance with the Resolution of the Directors on 17 June 2022. The appropriate number of copies of the Annual Report will be submitted to the CSE within the statutory deadlines and soft copies of same will be hosted on the website of the Company, www.cdb.lk.

Precautionary principle

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The precautionary principle has been applied in relation to the Company’s social and environmental sustainability. Although the CDB’s business model and operations do not directly create a significant negative impact on the environment, as a responsible corporate citizen, the Company has taken necessary measures to mitigate the risks caused to society and the environment through its actions.

Improvements in reporting

This Report has been structured to effectively communicate our efforts to create value to all our stakeholders across the short, medium and long-term through our business model on pages 47 and 48. We have identified and categorised into risks and opportunities the emerging developments and trends that are likely to impact our business model and value creation process based on their importance to the Company and the stakeholders, together with the stakeholders that are likely to be affected most. The Value Creation Story (pages 52 to 109) contained in this report provides a detailed account of the strategic imperatives and strategies to mitigate risks and capitalise opportunities. The underlying governance structure and the risk management framework are detailed on pages 110 and 168.

External Auditors and assurance

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The Company’s External Auditors, Messrs KPMG, who were appointed in accordance with a resolution passed at the 5th Annual General Meeting held on 30 July 2021 have expressed their opinion, given on pages 174 to 177 of this Annual Report as required by Section 168 (1) (c) of the Companies Act No. 07 of 2007 and assurance on sustainability indicators as shown on pages 284 to 286. The details on the remuneration of External Auditors are given in Note 13.2 on page 196 to the Financial Statements. As far as the Directors are aware, the Auditors do not have any other relationship with the Company. The External Auditors do not have any interest in contracts with the Company.

Disclosure on the affairs of the Company’s related party transactions

There were no related party transactions which exceeded 10% of the equity or 5% of total assets, whichever is lower during the reporting period. The Company complied with the requirements of the Listing Rules of the CSE on Related Party Transactions. However, the Directors have disclosed the transactions that could be classified as related party transactions which are adopted in the presentation of the Financial Statements and accordingly given in Note 45 on pages 241 to 243 of this Annual Report and a summary of the said transactions carried out during the FY was presented to the Board on 28 June 2022.

Queries

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We welcome your comments and suggestions on this Report and kindly invite you to direct your feedback to:

Chamath Siriwardana
Senior Manager – Finance and Planning

Citizens Development Business Finance PLC,
No. 123, Orabipasha Mawatha,
Colombo 10.
chamath.siriwardana@cdb.lk

The Board of Directors does hereby acknowledge the contents of this Annual Report as per the requirement of Section 168 (1) (k) of the Companies Act No. 07 of 2007.

Signed in accordance with the resolution adopted by the Directors.

Alastair Corera Chairman/Non-Executive Independent Director	Mahesh Nanayakkara Managing Director/Chief Executive Officer/Executive Director
Senior Prof Sampath Amaratunge Non-Executive Independent Director	Damith Tennakoon Deputy CEO/Chief Financial Officer/Executive Director
Roshan Abeygoonewardena Executive Director	Sasindra Munasinghe Executive Director
Dave De Silva Executive Director	Karthik Elangovan Executive Director
Prof Prasadini Gamage Non-Executive Independent Director	Jagath Abhayaratne Non-Executive Director
Ms Rajitha Perera Non-Executive Independent Director	Sujeewa Kumarapperuma Non-Executive Independent Director
Samitha Hemachandra Non-Executive Director

17 June 2022
Colombo