Dialog Finance : Audited Financial statements as of 31-12-2023

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DIALOG FINANCE PLC

FINANCIAL STATEMENTS FOR THE YEAR ENDED

31 DECEMBER 2023

DIALOG FINANCE PLC

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

DIALOG FINANCE PLC

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

CONTENTS

PAGE

Annual Report of the Board of Directors	1	- 5
The Statement of Directors' Responsibility		6
Independent Auditor's Report	7 - 11
Statements of Profit or Loss and Other Comprehensive Income	12	- 13
Statements of Financial Position		14
Statement of Changes in Equity		15
Statements of Cash Flows		16
Notes to the Financial Statements	17	- 84

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DIALOG FINANCE PLC

Annual Report of the Board of Directors for the year ended 31 December 2023

The Board of Directors of Dialog Finance PLC ('the Company') is pleased to present its Annual Report on the State of Affairs of the Company for the year ended 31 December 2023, together with the audited financial statements of the Company.

This report contains the information required in terms of the Companies Act, No. 07 of 2007, Finance Business Act, No. 42 of 2011 and Directions issued there under and the Listing Rules of the Colombo Stock Exchange.

The Company

The Company bearing the registration No. PB 765 PQ, is a public limited liability company incorporated and domiciled in Sri Lanka. The registered office of the Company is located at No. 475, Union Place, Colombo 02 and the principal place of business is located at No. 57, Srimath Anagarika Dharmapala Mawatha, Colombo 03.

The Company was incorporated on 25 November 1981, under the Companies Ordinance (Chapter 145), bearing the name Silvereen Finance Company Limited. The Company changed its name to People's Merchant Finance Company Limited on 30 September 2009 and Capital Alliance Finance Limited on 16 September 2011. The Company was re-registered under the provisions of the Companies Act, No. 07 of 2007 on 21 November 2011 and was accordingly renamed as Capital Alliance Finance PLC. On 22 December 2015, the Company changed its name to Colombo Trust Finance PLC and following the acquisition by Dialog Axiata PLC, the Company changed its name to Dialog Finance PLC on 15 September 2018.

The Company is a Licensed Finance Company under the Finance Business Act, No. 42 of 2011 and the ordinary shares of the Company were listed on the Colombo Stock Exchange ("CSE") on 4 October 2011.

Principal business activities

The Company offers a comprehensive range of financial services which include fixed and savings deposits, margin trading facilities, revolving loans, debt factoring, payment services and other financial facilities.

Financial statements

The financial statements of the Company as set out on pages 12 to 84, comprise of the statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows and notes to the financial statements of the Company. They have been prepared in accordance with the Sri Lanka Accounting Standards (SLFRSs & LKASs) laid down by the Institute of Chartered Accountants of Sri Lanka, in compliance with the requirements of the Companies Act, No. 07 of 2007 ("the Companies Act") and the Finance Business Act, No. 42 of 2011.

The aforementioned financial statements for the year ended 31 December 2023 are duly signed by the Chief Executive Officer, Head of Finance and two other Directors of the Company.

Independent auditors' report

The Independent Auditors of the Company are Messrs. Deloitte Partners ("Deloitte"), Chartered Accountants. Deloitte carried out the audit on the financial statements of the Company for the year ended 31 December 2023 and their report on the financial statements, is set out on pages 7 to 11.

Material accounting policies

The significant accounting policies adopted in the preparation of the financial statements are given on pages 17 to 39.

Directors' responsibility for financial reporting

The Directors are responsible for the preparation of the financial statements of the Company to reflect a true and fair view of its state of affairs. The Directors are of the view that these financial statements appearing on pages 12 to 84 have been prepared in conformity with the requirements of the Sri Lanka Accounting Standards, Companies Act, the Finance Business Act, No.42 of 2011 and amendments thereto and the Listing Rules of the Colombo Stock Exchange.

The detailed Statement of Directors' Responsibility for Financial Reporting is set out on page 6 of this Annual report.

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DIALOG FINANCE PLC

Annual Report of the Board of Directors for the year ended 31 December 2023 (Continued)

Property, plant and equipment

The details of property, plant & equipment are given on Note 27 to the financial statements.

1. Capital expenditure
   The total capital expenditure made on acquiring property, plant and equipment and intangible assets of the Company amounted to Rs. 54.70Mn (For the year ended 31 December 2022 - Rs. 101.27Mn) and the details are given in Notes 27 and 28 to the financial statements.
2. Capital commitments
   The capital expenditure approved and contracted for, as at the reporting date is given in Note 38 to the financial statements.

Reserves

The aggregate value of reserves and their composition are set out in the Statement of Changes in Equity of the Company on page 15 to the financial statements.

1. Statutory reserve fund
   The statutory reserve fund is a capital reserve which consists of profits transferred as required by section 3 (b) (ii) of Central Bank Direction No. 1 of 2003.

Stated capital

The Stated Capital of the Company as at 31 December 2023 amounted to Rs. 2,934,582,100 consisting of 117,399,866 ordinary shares (31 December 2022 - Rs. 2,934,582,100 consisting of 117,399,866 ordinary shares).

1. Shareholdings of the Company

The parent company, Dialog Axiata PLC, held 99.05% of the Ordinary shares in issue of the Company as at 31 December 2023. The main shareholders of the Company and corresponding holding percentages are set out below.

			31 December 2023
	Name of Shareholder
	No. of shares	%
			Holding
1	Dialog Axiata PLC	116,290,376	99.05%
2	Mr. R.C.J. Goonewardene	258,363	0.22%
3	Mr.S.R.S. De Saram/ Mrs. S.T.T. Jayasundera (Joint)	112,000	0.10%
4	Mr. M.A.T. Raaymakers	27,307	0.02%
5	Mrs. R. Ameen UR Rahman/ Mr.K.R. Ameen UR Rahman (Joint)	26,000	0.02%
6	Hatton National Bank PLC/ Dawi Investment Trust (Pvt) Ltd	24,750	0.02%
7	Mr. P.S.M. Fernando	24,282	0.02%
8	Mr. W.C. Madhushanka	22,000	0.02%
9	Guardian Insurance Brokers (Pvt) Ltd	20,039	0.02%
10	Mr. D.M.H.B. Dasanayake	20,000	0.02%
11	Dawi Investment Trust (Pvt) Ltd	19,287	0.02%
12	People's Leasing & Finance PLC/ C.D.Kohombanwickramage	18,152	0.02%
13	Mr. M.K. Gunawardena/ Mr. M.K. Gunawardena (Joint)	16,190	0.01%
14	Mr. B.Y. Edirisuriya/ Mrs. R.D. Edirisuriya/ Mr. P.M.Weerasuriya (Joint)	15,001	0.01%
15	Mr. G. D. M Ranasinghe/ Mrs. O. R. K Ranasinghe (Joint)	14,029	0.01%
16	Mrs. S. Suwandaratne	13,346	0.01%
17	Miss. T.K. Hulugalle	12,865	0.01%
18	Citizens Development Business Finance PLC/ K.D.C. Somalatha and K.	10,480	0.01%
Nandasiri
19	Mr. T.D. Mahaliyana	10,082	0.01%
20	Miss. M.P.Radhakrishan	9,330	0.01%
	Others	435,987	0.37%
	Total	117,399,866	100.0%

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DIALOG FINANCE PLC

Annual Report of the Board of Directors for the year ended 31 December 2023 (Continued)

Stated capital (Continued)

(c) Minimum public holding requirement

The percentage of shares held by the public as at 31 December 2023 was 0.95%, in the hands of 747 public shareholders (31 December 2022 - 0.95% in the hands of 726 public shareholders)

The Company is not compliant with the Minimum Public Holding requirement under section 2 of Rule 7.13.1(b) of the Listing Rules of the Colombo Stock Exchange ("CSE"). Accordingly, the Company was transferred to the Second Board on 10 February 2020.

1. Equitable treatment to shareholders
   The Company has at all times ensured that all shareholders treated equitably.

Board of Directors

The Board of Directors of the Company comprise of 5 Directors (31 December 2022- 5) with wide financial and commercial knowledge and experience.

The classification of Directors into Executive (ED), Non-Executive (NED), Independent (IND) and Non-Independent Directors (NID) is given against the names as per Listing Rules and Corporate Governance Rules of the CSE and the Finance Companies Direction No.03 of 2008 and subsequent amendments thereto issued by the Central Bank of Sri Lanka.

The Directors of the Company as at 31 December 2023 were;
Name	Classification	Remarks (Appointed date,
	(NED/NID/ED)	change of directorate to
		chairman etc)
Ms. Renuka Fernando (Chairperson)	NID/NED	22	May 2020
Mr. Supun Weerasinghe	NID/NED	09	November 2017
Mr. Priyan Edirisinghe	IND/NED	19	January 2016
Mr. Roshaan Hettiaratchi	IND/NED	09	February 2016
Mr. Nazeem Mohamed	NID/ED	24 June 2022

Board subcommittees

The Board, while assuming the overall responsibility and accountability for the management oversight of the Company, has also appointed Board Sub Committees to ensure that the activities of the Company are conducted with the highest ethical standards and the best interest of its stakeholders at all times. The Board has formed many sub committees including the following:

• Audit Committee
• Nominating and Remuneration Committee
• Integrated Risk Management Committee
• Related Party Transactions Review Committee

Directors' interest in contracts and proposed contracts

Directors of the Company have made necessary declarations of their interest in contracts or proposed contracts, in terms of the Section 192(1) and 192(2) of the Companies Act. These interests have been recorded in the interest register which is available for inspection in terms of the Companies Act. The Directors have no direct or indirect interest in a contract or a proposed contract with the Company other than those disclosed.

1. Directors' interest in shares of the Company
   None of the Directors and their close family members directly held any shares in the Company as at 31 December 2023. (As at 31 December 2022 - Nil).

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DIALOG FINANCE PLC

Annual Report of the Board of Directors for the year ended 31 December 2023 (Continued)

Directors' remuneration

The details of Directors' emoluments and other benefits paid in respect of the Company during the year under review are given in Note 42 to the financial statements.

Related party transactions

The Directors have disclosed transactions if, any that could be classified as related party transactions in terms of Sri Lanka Accounting Standards - LKAS 24 (Related Party Disclosure) which is adopted in the preparation of the financial statements. The details of all related party transactions carried out during the period are disclosed in Note 42 to the financial statements.

Outstanding litigation

In the opinion of the Directors and in consultation with the Company lawyers, there were no pending litigations against the Company as at 31 December 2023 which would have a material impact on the reported financial results, or future operations, of the Company.

Statutory payments

The Directors, to the best of their knowledge and having made adequate inquiries from management, confirm that all taxes, duties, levies and statutory payments payable by the Company on behalf of and in respect of the employees of the Company as at the date of the statement of financial position have been duly paid, or where relevant, have been provided for, except as disclosed in Note 38 to the financial statements.

Risk management and internal controls

1. Internal controls
   The Directors of the Company have taken reasonable steps to safeguard the financial operations of the Company to prevent and detect fraud and any other irregularities. For this purpose, the Directors consider that the system of internal controls is appropriately designed for identifying, recording, evaluating and managing the significant risks faced by the Company throughout the period and it is being regularly reviewed by the Board of Directors. The Directors further confirm that this is an on - going process to identify, evaluate and manage significant business risk.
2. Corporate governance
   The Directors of the Company are committed towards maintaining an effective Corporate Governance Framework and implementing processes with respect to the management and operations of the Company in order to develop and nurture sustainable growth and long-term relationships with key stakeholders. The Directors confirm that the Company is compliant with Section 7.10 of the Listing Rules of the CSE and the Directions on Corporate Governance issued by the Central Bank of Sri Lanka (CBSL).

Environmental protection

The Company makes every endeavour to comply with the relevant environmental laws, regulations and best practices applicable in the country. After making adequate inquiries from the management, the Directors are satisfied that the Company operates in a manner that minimises the detrimental effects on the environment and provides products and services that have a beneficial effect on customers and the communities within which the Company operates.

To the best of the knowledge of the Board of Directors, the Company has not engaged in any activity which is harmful or hazardous to the environment and complies with the relevant environmental laws and regulations.

Donations

The Company has not made any donations during the year ended 31 December 2023. (For the year ended 31 December 2022 - Nil).

Taxation

Provision for taxation has been computed in accordance with income tax legislations and applicable tax rates are given in Note 15 to the financial statements.