Commercial Development : Annual Report - 2023

Commercial Development Company PLC

In accord

Mutual agreement and respect, the cornerstone of any enduring relationship, govern our symbiotic ties with Commercial Bank of Ceylon PLC, which, as our esteemed parent, also serves as our sole customer. Our prospects and prosperity are intricately woven into the fabric of this mutual understanding. Our superior value proposition built on a wealth of resources - expertise, capacity, technology, commitment, financial strength, and acceptance - has seamlessly aligned with the expectations of the Bank, enabling us to strike that enduring accord over the past

40 years. Despite certain inherent constraints on the scope and the unpredictable tides of the operating environment, this shared understanding has propelled our pursuit of a balanced approach to growth and sustainability. Looking to the future, our commitment remains resolute, ensuring that our offerings continue to align seamlessly with the expectations of the Bank, as we go above and beyond to secure a lasting accord for the years to come.

Commercial Development Company PLC

Annual Report 2023

Contents

Overview

About the Company About the Report Financial Highlights Chairman's Message Managing Director's Review Chief Executive Officer's Review Context for Our Performance

Business Model for Sustainable Value Creation Stakeholder Engagement

Management Discussion and Analysis

Financial Capital

Intellectual Capital

Manufactured Capital

Human Capital

Social and Relationship Capital

Natural Capital

Governance and

Risk Management

Board of Directors and Profiles Executive Management Corporate Governance

Report of the Board Audit Committee

Report of the Board Remuneration Committee

Report of the Board Related Party Transactions Review Committee

Directors' Statement on Risk Management and Internal Control

Annual Report of the Board of Directors

Statement of Directors' Responsibility for Financial Reporting

Managing Director's and Finance Manager's Responsibility Statement

Risk Management

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8
10
12
15		Financial Reports	99
18
21
22	Financial Calendar 2023 and 2024	100
25
Independent Auditors' Report	101
	Income Statement	104
	Statement of Profit or Loss and other
	Comprehensive Income	105
29	Statement of Financial Position	106
Statement of Changes in Equity	107
	Statement of Cash Flows	108
30	Notes to the Financial Statements	110
32
33
34
38		Supplementary
39
	Information	175
	Investor Information	176
41	Decade at a Glance	181
Glossary	183
	Alphabetical Index	186
42	Notice of Meeting	187

47	Enclosed Form of Proxy
Enclosed Stakeholder Feedback Form
48
Corporate Information (Inner Back Cover)
72
74
76
78
80
86
88
89

Commercial Development Company PLC

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Annual Report 2023





Overview

About the Company	6
About the Report	8
Financial Highlights	10
Chairman's Message	12
Managing Director's Review	15
Chief Executive Officer's Review	18
Context for Our Performance	21
Business Model for Sustainable Value Creation	22
Stakeholder Engagement	25

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Overview

Management Discussion and Analysis

Governance and Risk Management

Financial Reports

Supplementary Information

Annual Report 2023

Aboutbout the Companythe Company

Commercial Development Company PLC (CDC) was incorporated on March 14, 1980. The initial purpose of forming the Company was to construct the Head Office building for the Commercial Bank of Ceylon PLC ("the Bank"), its sole client, which owns a 90% stake as of December 31, 2023, (90% as of December 31, 2022).

The Company has been listed on the Colombo Stock Exchange since March 1983 and has a market capitalisation of Rs.1,341 Mn. as at the end of 2023.

The services which CDC is allowed to provide to the Bank are specified and restricted by the Central Bank of Sri Lanka (CBSL). The four primary lines of business provided by CDC to the Bank are as follows:

Renting of	Outsourcing	Hiring of	Providing other
premises	of staff	vehicles	utility services

The Company's real estate portfolio includes the "Commercial House" building at No. 21, Sir Razik Fareed Mawatha, Colombo 01, which houses the Head Office and the Foreign Branch of the Bank. CDC also owns two other properties in Negombo and Tangalle, which are also rented to the Bank.

CDC has repeatedly sought the permission of the CBSL to expand its role in relation to the Bank, in addition to serving external clientele, and other lines of related businesses, but has met with limited success to date. However, the Company will keep requesting the CBSL to grant permission to provide its services to other clients.

Commercial Development Company PLC

Timeline

CDC turnover exceeds Rs. 500 Mn.

CDC purchases second investment property to house the Commercial Bank Branch in Tangalle.

CDC turnover exceeds Rs. 100 Mn.

CDC shares are listed on the Colombo Stock Exchange, and public issue of shares was oversubscribed.

2021

2017

2015

2014

2006

2002

1983

1981

CDC purchases a third investment property to provide car parking space at the Commercial Bank Branch in Negombo.

CDC installs an energy efficient air conditioning system in the "Commercial House" building at a cost of Rs. 71 Mn., generating a 30% reduction in electricity charges.

CDC establishes new business line of outsourcing staff by increasing the total number of staff from 55 to 245.

CDC commences a new business line of renting vehicles to Commercial Bank.

The Urban Development Authority (UDA) grants permission for ground to be broken at No. 21, Bristol Street. Canadian contractor, the Collavino Construction Company, is appointed to build the "Commercial House" Building.

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Overview

Management Discussion and Analysis

Governance and Risk Management

Financial Reports

Supplementary Information

Annual Report 2023

Aboutbout the Reportthe

Report

The 44th Annual Report of Commercial Development Company PLC ("CDC") aims to disseminate appropriate information to all our stakeholders, presenting how CDC takes into account all material, financial and non-financial aspects relevant to the Company, and how resources are allocated through the six capitals to create sustainable value for all our stakeholders.

The theme "In accord" reflects the mutual agreement and respect that underpins the enduring relationship between CDC and Commercial Bank of Ceylon PLC, which is the esteemed parent and sole customer. This relationship has been nurtured over 40 years, with a focus on a superior value proposition encompassing expertise, technology, and financial strength. Despite challenges and changes in the operating environment, the commitment to growth and sustainability remains steadfast, ensuring continued alignment with the Bank's expectations for a lasting accord in the future.

Scope and Boundary

This Annual Report covers operations for the period from January 01, 2023 to December 31, 2023 in keeping with the usual annual reporting cycle for financial reporting and includes: a synopsis of operational performance in relation to risks and opportunities in the operating environment; CDC's financial results for the financial year 2023; and an overview of corporate governance, risk management and compliance frameworks within which CDC operates.

Reporting Frameworks

The 44th Annual Report adheres to all relevant regulatory compliance requirements applicable to entities listed on the Colombo Stock Exchange. In addition, the report presents a range of non-financial information alongside traditional financial commentary.

Guiding Frameworks and Principles

Financial Reporting

• Companies Act No. 07 of 2007
• Listing Rules of the Colombo Stock Exchange (CSE)
• Sri Lanka Financial Reporting Standards (SLFRS) and Sri Lanka Accounting Standards (LKAS) issued by The Institute of Chartered Accountants of Sri Lanka
  (CA Sri Lanka)

Corporate Governance

• Code of Best Practice on Corporate Governance 2023 issued by CA Sri Lanka
• Listing Rules of the CSE
• Directions issued by the Securities and Exchange Commission of Sri Lanka
• Companies Act and amendments there to.

Targeted Readers

This Report is primarily prepared to provide information to the Shareholders of CDC, as well as information on value creation to other key stakeholders, including Investors, Regulators, Employees, Customers, Business Partners and Community.

Commercial Development Company PLC

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