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NDB capital holDiNgs ltD | aNNual report 2014

www.ndbch.com

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Corporate information

Design & Concept by: Optima Designs (Pvt) Ltd.Printed by: Printel (Pvt) Ltd.

nameNDB capital holdings limited (the company was registered under the companies act No.17 of 1982 and subsequently re-registered under the companies act of No 7 of 2007 on 26th December 2007)

LeGaL StatUSpublic limited liability company (De-listed from the official list of the Colombo Stock exchange on 26th January 2015)

inCorporation12th october 1983

reGiStereD nopQ 110pB

StateD CapitaLrs. 1,328,880,070

BoarD of DireCtorSMr. Ashok Pathirage (Chairman)Mr. rajendra theagarajahMr. Sarath WikramanayakeMr. Vajira Kulatilaka (CEO)Ms. Aruni RajakarierMr. Malinga ArsukularatneMr. Faizan ozman (Appointed w.e.f. 13/1/2015)Mr. Indrajit Wickramasinghe (Resigned w.e.f. 19/9/2014)

CompanY SeCretarYMs. Mayomi Samarawickrama(Attorney-at-Law)

reGiStereD offiCe40, Navam Mawatha, colombo 2

aUDitorSMessers ernst & Youngchartered accountants201, De saram place, colombo 10

BanKerSNational Development Bank PLC

memBerS of tHe BoarD CommitteeS aS at 31St DeCemBer 2014Investment CommitteeMr. Malinga Arsukularatne - ChairmanMs. Aruni RajakarierMr. rajendra theagarajah

Human Resources and Remuneration CommitteeMs. Aruni Rajakarier – ChairpersonMr. Ashok PathirageMr. Malinga Arsukularatne

Audit, Risk and Compliance CommitteeMs. Aruni Rajakarier – ChairpersonMr. Malinga ArsukularatneMr. Sarath Wikramanayake

ContaCt DetaiLSNDB Capital Holdings Ltd.No. 40,Navam Mawatha,colombo 2.tel: +94 11 2300385Fax: +94 11 2300393

NDB Securities (Pvt) Ltd.5th Floor, No. 40,Navam Mawatha,colombo 2.tel: +94 11 2314170Fax: +94 11 2314180

NDB Investment Bank Ltd.No. 40,Navam Mawatha,colombo 2.tel: +94 11 2300385Fax: +94 11 2300393

NDB Wealth Management Ltd.No. 42,Navam Mawatha,colombo 2.tel: +94 11 2303232Fax: +94 11 2303237

NDB Zephyr Partners Ltd.iFs court,twentryeight, cybercityebene,Maurutiustel: +230 467 3000Fax: +230 467 4000

NDB Zephyr Partners Lanka (Pvt) Ltd.No. 40,Navam Mawatha,colombo 2.tel: +94 11 2300385Fax: +94 11 2300393

Gri- G4 / G4 - 3G4 - 5G4 - 7

Contents

Report Profile 3Financial Highlights 4Key Achievements 6Chairman’s Message 8CEO’s Message 12Investment Banking Business 17Close Up 18Management Discussion and Analysis - Outline 22 - Economic Review 23 - Business Review 32 - Subsidiary Review 39 - Financial Review 59Sustainability in Focus 62GRI Checklist - G4 121

Annual Report of the Directors on the State of Affairs of NDB Capital Holdings Limited 128Directors’ Interest in Contracts with the Company 131Directors’ Statement on Internal Controls over Financial Reporting 132Report of Board, Audit, Risk and Compliance Committee 134Independent Auditors’ Report 137Income Statement 138Statement of Financial Position 139Statement of Changes in Equity 141Cash Flows Statement 142Notes to the Financial Statements 143Ten Year Summary - Income statement 177Ten Year Summary - Statement of Financial Position 178Shareholder and Investor Information 179List of Tables, Figures, Charts and Acronyms 181Notes 185Notice of Meeting 186Form of Proxy 187Corporate Information Inner Back Cover

2 | NDB Capital Holdings LTD | Annual Report 2014

VisionTo be a leading full service investmentbank in the region

Values▪ Webelieveinintegrityandhonestywhileperformingbeyondexpectations

▪ MarketLandscapeiseverchanging:Innovationisourforte

▪ Aknowledge-basedorganisation:Ourpeopleareourassets

▪ Weareverypassionateabouttheworkwedo


ContentOurAnnualReportforthefinancialyearended31stDecember2014seekstogivemorestructure,clarityandsignificancetoourreporting-highlightingthelinkbetweenourstrategy,actionsandperformancewithasustainabilityperspective.ThereportattemptsfortheveryfirsttimetofollowtheguidelinessetoutbytheGlobalReportingInitiative(GRI)underthelatestrecommendedstandard,‘GRI(G4)’.

Thereportseekstoestablishourcommitmenttocreatelong-termvaluewithkeystakeholderinclusivity;encompassingthecomprehensiveproductandserviceofferdesignedtomeetvariedneedsofinvestorsegments,theinitiativestakentobuildasolidteam,measuresadoptedtoupholdbusinessethics,governanceandriskmanagementandourfocusedeffortstolinksocialresponsibilityandevenenvironmentmanagementtohavemoremeaningtoourdailyoperations.

ThereportdemonstratesNDBCapitalHoldingsLimited’s(NCAP)performancealongwithitssubsidiaries,focusingonhowtheoperationspursuedthestrategicprioritiesinlinewiththe‘StrategicPlan2012-2017’.Asappropriate,wehavesoughttobenchmarkourperformancetotheprecedingyear’sresultsandwiththeindustrytrendswhilstsettingoutthefutureoutlookandplans.Theauditedfinancialstatements,relatednotesandreportsarepresentedwithcomparativeinformationandanalysisoftheprecedingyear.

REPORT BOUNDARY AND SCOPE

Refer Materiality Analysis, pages : 67

NCAPinitspreviousyear’sannualreportbroughtinthesustainabilityfocusintothereportingprocess.Yet,thisyear,movingastepahead,weattempttoreportinaccordancewiththelatestguidelinesofGRIframework.Thereportisbasedon‘inaccordance’withthe‘Core’option.

ThereportcoverstheoperationsofNCAPastheholdingcompanyanditsthreefullyownedsubsidiaries-NDBInvestmentBankLtd(NDBIB),NDBWealthManagementLtd(NDBWM)andNDBSecurities(Pvt)Ltd(NDBS).Asandwhenappropriate,referencesaredrawntoourlatestjointventure,NDBZephryPartnersLtd(NDBZ),establishedinDecember2014.

REPORT PROFILE

Thereportcontentisdevelopedbasedonthe‘materialityprinciple’asguidedbythesustainabilityreportingstandardwhichwillbediscussedatlengthunder‘MaterialityAnalysis’sectionofthisAnnualReport.ApartfromtheStandardDisclosures,welookedatcomplyingwithspecificdisclosureswiththemanagementapproachandindicatorprotocolsintermsofeconomic,environmentandsocialfacets-mostmaterialtotheNCAPgroupandsignificanttoourkeystakeholders.Wehavealsolookedatadoptingthesectordisclosuresavailableforfinancialservices.

Givingprecedencetotheprecautionaryprincipleinoperations,NCAPtogetherwithitssubsidiariesareplacedundertheenterprise-wideriskmanagementprocessandinternalcontrolsoftheparentcompany,NDB.FinancialstatementspresentedforbothattheCompanylevelandonaconsolidatedbasis,havebeenpreparedandauditedinaccordancewithSriLankaAccountingStandards,guidedbytheInternationalFinancialReportingStandards.ThefinancialstatementsandrelatednoteshavebeenauditedindependentlybyMessrsErnst&Young.TheCompanywasintheprocessofde-listingintheyearunderreviewandwasde-listedon26thJanuary2015.Despitede-listing,NCAPintendstofollowrelevantprovisionsoftheCodeofBestPracticeonCorporateGovernance,publishedjointlybytheSecuritiesandExchangeCommissionofSriLanka(SEC)andtheInstituteofCharteredAccountantsofSriLanka(ICASL)onavoluntarybasis.TheGroupalsometthestatutoryrequirementsasrelevantundertheCompaniesActNo.07of2007.

Externalassuranceonthesustainabilityaspectsofthereporthasnotbeenobtained.

TheGRI(G4)ContentIndexisplacedonpages121-126.Thesummaryofthereportcontentisgivenonpage74.

INqUIRIES AllinquiriesontheAnnualReport2014includingperformance,futureoutlookandsustainabilityaspectsaretobedirectedto:

IsuruSomaratne,AssistantVicePresidentAddress:No.40,NavamMawatha,Colombo02.Telephone:+94112300385Email:[email protected]

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FINANCIAL HIGHLIGHTS

Company Group 2013 2013 2014 % Change 2013 2013 2014 % Change Adjusted* Adjusted*

For the Year (Rs. Mn)Revenue 784 609 755 24% 1,469 1,294 1,417 9%OperatingProfit 703 528 641 21% 1,032 857 959 12%ProfitBeforeTax 703 528 641 21% 1,032 857 959 12%ProvisionforTaxation (22) (22) 24 -209% (99) (99) 5 -105%ProfitAfterTaxation 681 506 665 31% 932 757 964 27%GrossDividendPaid 719 719 280 -61% 719 719 280 -61%

As at the end of the Year (Rs. Mn)TotalAssets 5,745 5,570 6,176 11% 6,543 6,368 6,926 9%TotalEquity 5,699 5,524 6,094 10% 5,852 5,677 6,532 15%

Information per Ordinary Share (Rs.)Earnings 19.11 14.20 20.21 42% 26.15 21.24 29.31 38%Dividends(Paid) 16.40 16.40 8.50 -48% 16.40 16.40 8.50 -48%NetAssetValue 159.89 154.98 185.19 19% 164.18 159.27 198.51 25%

RatiosROE 12.8% 9.6% 11.3% 17% 16.1% 13.3% 15.6% 18%ROA 12.7% 9.6% 11.2% 17% 15.0% 12.4% 14.3% 15%Debt/Equity(Gearing) 0.000 0.000 0.000 0% 0.000 0.000 0.000 0%

MarginsOperatingProfitMargin 90% 87% 85% -2% 70% 66% 68% 2%NetProfitMargin 87% 83% 88% 6% 63% 59% 68% 16%

*2013figureshavebeenadjustedtoexcludeRs.175Mnone-offinvestmentincomeearnedfromthecashgeneratedthroughthedivestitureofAvivaNDBInsurancePLC


We are prepared to take financial services

to the next level, With a zeal that cannot be matched as We remain committed to

alWays delivering more to our stakeholders

ready


nCAP

SuccessfullycompletedtheHemasPower(renamedasResusEnergy)acquisitionwith32%initialstakeforNCAP GlobalFinance-BestAssetManagementCompany

WorldFinance-BestInvestmentManagementCompany

Grosscollectionsfortheyear2014-Rs.43Bn

AUMreachedRs.87Bnasat31stDecember2014

MutualFundgrosscollectionsbytheyear2014-Rs.31Bn

NCAP’slistedequityinvestmentsyielded35%in2014againstanASPIreturnof23%

LaunchedthelargestprivateequityfundinSriLankaamountingtoUSD42.5Mn

NCAPAnnualReport2013wontheBronzeMedalat“CASriLankaAnnualReportAwards”undertheFinancialInstitutionscategory

TheGroupbagged21prestigiousinternationalawards

TheonlyAsianinvestmentbanktoberecognizedasthe‘BestInvestmentBank’intwocountriessimultaneously, SriLankaandBangladesh,byEuromoneyMagazine

NDBwM

2014A LIST OF ACHIEvEMENTS OF THE COMPANY DURINGTHE YEAR 2014

KEY ACHIEvEMENTS


“BestInvestmentBankinSriLanka2014”byEuromoneyMagazineforthethirdconsecutiveyear

TriLingualresearchpublicationsintroduced

Real-timeSMSalertservicelaunched

NDBSmovedtowardse-statementsforaccount

Numberoneperformerbasedonresearchrecommendationsforyear2014(source:Bloomberg)

2,831newaccountsopened

NDBIBbagged9prestigiousinternationalawards

“BestInvestmentBankinSriLanka2014”byWorldFinanceMagazineforthesecondsuccessiveyear

RaisedapproximatelyRs.37BnsincetheintroductionoftaxconcessionsfordebentureslistedontheCSEin2013

ManagedtheissueofLionBrewery(Ceylon)PLCdebenture-thelowestinterestforanon-bankingsectordebenture

RaisedapproximatelyUSD50MnthroughacrossborderloansyndicationinBangladesh

VenturedintoIslamicBankingproductsthroughthesuccessfulstructuringandplacingofaWakalaIslamicBankingFacility

NDBIB NDBS


CHAIRMAN’S MESSAGE

Intheyear2014,NDBCapitalHoldings(NCAP)togetherwithitssubsidiariesremainedcommittedanddeterminedtofollowthroughawell-deliberatedstrategy,entwinedwithintegrityandresponsibility;thuslayingasolidplatformfromwhichtosoarandreachgreatergoals.Nurturingstrongbondsandtrustamongstourkeystakeholders,wewereabletokeepuptoourtrackrecordasadominantinvestmentbankinggroup,withrobustreturnsandfinancialstability.ItismyprivilegeonbehalfoftheBoard,topresenttheAnnualReport2014togetherwiththeauditedfinancialstatements,unfoldingasreflectedinthisyear’stheme,howtheNCAPGroupisnowready,steadyandsettogo,wellintothefuture.

UNDERLINING ECONOMIC FORCESWesawoptimismcontinuewithintheworldeconomy,reboundingfromthelong-drawn-outrecession,butvacillatinginitspathwithdownsiderisksstillweighingdownthepotentialresults.ThiswasfurtherintensifiedbythegeopoliticalundercurrentsespeciallyintheMiddleEastandthepredicamentinUkraine.Withinthedevelopednations,United

StatesofAmericafollowedbytheUnitedKingdomdisplayedstrongerresults,backedbypragmaticmacropolicies;manyoftheEurozonenationshowever,tautbythedeflationarytrends,fellshortoftheanticipatedgrowthprospects.JapanremainedslowtomeetthegrowthaspirationsdespitetheAbenomicspolicies.Theemergingnationsheldontohealthygrowthlevels,althoughlessimpressiverelativetotheperformanceinthepreviousyears.ThefinancialmarketswithintheseeconomieswerevulnerabletothechangesinmonetarypolicymainlyintheUnitedStatesofAmerica.Oilexportingcountrieswerefurtherdistressedgiventhetrendingdipinoilpricessincethelatterpartof2014,althoughtheimportingcountriesgainedbuffer.

Buoyedbythestrongersignalsfromtheworldeconomyandsupportedbyamorestablemacroeconomicfrontin2014, SriLankaprogressed,rallyingtowardsstrongergrowth,aheadofitsregionalpeers.Withinflationpersistentlyatsingle-digitlevels,themonetarypolicyremainedaccommodativewhilstmaintainingrelativelyasteadierbalanceofpaymentsscenarioandstableexchangerateagainstthemajorcurrencies.Inthis

GRI - G4/ G4 - 1


Buoyed By the stronger signals from the world economy and

supported By a more staBle macroeconomic front in 2014, sri lanka progressed, rallying

towards stronger growth, ahead of its regional peers. within

such exemplary Business settings, we saw a steady progress with a

roBust financial performance in the year under reView.


CHAIRMAN’S MESSAGE (Contd.)

15.6%HIGHLY COMMENDABLE RETURN ON EqUITY

setting,theCentralBankofSriLankaexpectstheeconomytogrowat7.3%,closingupwiththetargetssetforanupper middle-incomecountryinthemediumterm.

CAPITAL MARKET - GROwTH AND SUSTAINABILITYShiftingfromamoresluggishstance,thecapitalmarketintheyearwitnessedgreateractivitywithbetterreturns,displayingonceagain,itspotentialtobepivotalinrealisingthecountry’sdevelopmentobjectives.TheColomboStockExchange(CSE)togetherwiththeSecuritiesandExchangeCommissionof SriLanka(SEC)continuedwiththeireffortstodevelopandtobringmodernitytothemarket,furthertakingproactivemeasuresandexploringpolicyoptionstowardsboostingmarketliquidity,upgradingITinfrastructure,developingnewproductsandevenconsideringthedemutualisationoftheExchange.WiththechangesthatarecurrentlybeingdeliberatedontheregulatoryframeworkincludingtheproposedamendmentstotheSECAct,willcertainlyleadtoanequitablefieldwithgloballycommendedpracticesforthemarkettogrowsustainably.

PROGRESSIvE STRATEGY AND PERFORMANCEOverthecourseof2014,wesawtheNCAPGroupplayingadecisiverolewithinthecapitalmarketofSriLanka,currentandeffectiveinreinforcingthepresenceasaversatileinvestmentbankingentity.Weincreasinglyworkedtowardsbringingsmarterandmorecomprehensivesolutions,somepioneeringandevencustomised,settingaone-stopplatformwithadefinitivesellingproposition.Ourprofessionalismandexpertisewithrightinvestmentsintechnology,strongnetworkingskillsandstrategiccollaborationscombinedwiththestrengthoftheparent,NDB,givingusconfidencecredibilityandsteadiness,haveempoweredNCAPinreachingouttoitsstrategicgoals.

Recognisedintheyearbysomeoftheprestigiousawards,wecontinuedtobestronginourbusinessacumen,structuringandmanaginglargeandintensedealsontheCSE–initialpublicoffersandmergersandacquisitions.Weconsolidatedoursecuritiestradingactivitieswithgreateremphasisonstrengtheningtheforeigninvestorportfoliowhileourwealthmanagementarmstoodpoisedattheforefrontoftheassetmanagementandunittrustindustry.Ourlatestventureintoprivateequity,takingadvantageofrapidlyemergingsmallandmediumbusinesses,establishedthelargestdedicatedfundin

thecountryofUSD42.5Mn(firstclosure),‘EmeraldFund SriLanka’managedby,NDBZephyrManagementLtd,ourjointventureincollaborationwithaNewYorkbasedinvestmentmanager.Thisventurefittinglysupportedourroleasaninclusiveinvestmentandfinancialservicesprovider.

Withinsuchexemplarybusinesssettings,wesawasteadyprogresswitharobustfinancialperformanceintheyearunderreviewataconsolidatedlevel.Theassetsundermanagementmovedtowardsamilestonelevel–Rs.97Bnintheyearunderreview,growingat38%vis-à-vistheprioryear.ThegrouppostedrevenueofRs.1,417Mnwithprofitsreaching Rs.964Mn.Ourfinancialpositionasattheyear-endwassoundwhilstthereturnonequitystoodat15.6%.WeproposetodeclareadividendofRs.27.50pershare.

DE-LISTING RATIONALEAsatacticalmoveandinresponsetothenewregulatoryrequirementsetbytheSEConthemandatorypublicfloatof20%forlistedentitiesonthemainBoard,weinitiatedtheprocessinthereportingyear,tobe‘unlisted’byvoluntarilyde-listingfromtheCSE.Recently,re-launchedandre-positionedwithsomeofthekeygoalsyettobeaccomplishedasoutlinedintheBusinessPlan2013-2017,wefeltthatitwastooprematureforustogoinforahigherpublicfloatinthebestinterestoftheCompanyandourparent,NDBwhichholdsamajoritystakeofover99%.However,onastrongerplateau,leveragingonourpotentialasanall-encompassinginvestmentbankingandfinancialservicesproviderinthemediumterm,weintendtoseekouroptionsonceagain,tobroad-baseourownershipinthepublicdomainbyre-listingtheCompany.


COMMITMENT TO BEST PRACTICESOurunderlyingstrengthhasalwaysbeenourcommitmenttoupholdthebestincorporatepracticeswhichstandsmoretruetothefiduciaryroleweplayasaninvestmentbankingserviceprovider.Ourparent,NDB,hasgivenusasolidframeworkwithteamsupport,systemsandprocessestoenhanceourriskmanagementinlinewiththeguidelinesofBASELIIandtoensuregoodgovernance.Duringthereportingyear,weworkedtogethertofurtherinternalisetherisk-dashboardsinitiatedintheprecedingyear,givingusaheads-upontherisksthatmayariseinourdecisionsandinactions,andpavethewayfortimelyandeffectivemitigatorymeasures,thusleadingustobemorejudiciousinbalancingrisksvs.returns.

Althoughwewerenotgoingtobeboundbycontinuouslistingrequirementsinourde-listedstatus,wecontinuedwithoureffortstoreinforcethequalityofourgovernancestructureandpracticesinlinewiththewellendorsedCorporateGovernanceCodesetbytheSECofSriLankaandICASL.WefurtherbracedontheindependenceoftheBoardanditsdecisionmakingprocess;bringinginindependentdirectorstoplayagreaterroleinBoardCommitteeproceedingsandembracinggreatertransparencyinrelatedpartytransactionsthroughtheRelatedPartyReviewCommitteeproceedings.

Wecontinuedtoberesponsibleinourreportinginitiatives.OurAnnualReport2013themed‘More’,wasacclaimedforthereportingstandardswithaBronzeAwardattheAnnualReportAwardsorganisedbyICASLunderthefinancialinstitutionscategory.Weintendtobuildonthisfurther,bringingourreportingalignedtotheG4guidelinessetoutbytheGlobalReportingInitiative.

STRATEGIC PHILANTHROPYUpholdingastrategicapproachtophilanthropy,wesoughtintheyeartobemoremeaningfulandrelevantinoursocialresponsibilityinitiatives,withgreateralignmenttoourcorporatevaluesandmission.Ourdedicatedinitiative,‘NDBCapitalScholarshipTrust’,seekstosupportundergraduates,ourfutureleaders;thescopeisnotlimitedtofinancialassistance,butwillextendcareerguidance,skilldevelopment,managementandleadershipdevelopment,internshipexposuretocorporatecultureandnetworkingopportunities.Asa

businessfortifiedbyknowledgeandskillswithintheinvestmentbankingarena,thisinitiativeisanidealwayforustogivebacktosociety.

Inthereportingyear,theTrustFundtook-offsuccessfully,extendingthefirstroundofscholarshipstotendeservingandtalentedstudentsfromUniversitiesofMoratuwa,SriJayewardenepuraandColombofromthefieldsofengineering,medicine,lawandmanagementstudies.

APPReCIAtIonIplaceonrecordmygratitudetotheBoardfortheirvisionandsupportextendedtomeintakingtheNCAPGrouponavibrantcorporatepath.

MywarmappreciationisextendedtoourChiefExecutiveOfficeralongwiththeseniormanagementandtherespectiveteamsacrosstheGroupforbeingpassionateinworkingtowardsthestrategicambitionswhilstbeingsteadfastinupholdingourcorporateethos.

Itakethisoccasiontothankourclients,strategicpartners,statutoryandregulatorybodiesandallotherstakeholdersfortheirpatronageandtrust.

A K PathirageChairmanNDBCapitalHoldingsLTD

18thMay2015


CEO’S MESSAGE

NDBCapitalHoldings(NCAP)markedasignificantyear,layingtheplatformforaparadigmshiftwithaviablebusiness-drivenstrategytotakeontheinnateopportunitiesandaddressthechallengesinadynamiceconomiclandscape.Wecontinuedtogiveprecedenceandbuildonourfundamentalsinriskmanagement,goodgovernanceandcorporateethics;whilstbeingpragmaticinourapproachtosocialresponsibility,linkingtheoutcomestoourcorebusinessalongsidethefar-reachingbenefitstosociety.Inthisbackdrop,Isetmyreviewhereto,highlightingtheCompany’sandtheconsolidatedperformanceoftheNCAPGroupforthefinancialyear2014,alongwithourstrategicplansthatwouldleadourcorporatepathintheyearsahead.

BUSINESS-DRIvEN STRATEGYWecontinuedtopositionourGroupasafullserviceinvestmentbankingorganisation,wellsettooffervertically-definedsolutionsinademandingmarketplace.TheGroupcompanieshavecapabilitiesbackedbybest-in-classsystems,processes

andtalentwhichhavecometogethertoaddresstheneedsofdiversesegments,coveringfee-basedtofund-basedproductofferingscoupledwithretailandcorporatebankingthroughourparent,NDB.Weconcentratedintheyeartocapitaliseonthisforte–successfullypackagingandcross-promotingproductswithintheGroup.Weremainedfocusedinfosteringandleveragingonourparent,NDB–thebrandandthelinkages;whilstemphasisingonrelationship-basedexperiencewithgreaterinvestmentsintechnologyandtoempowerourteam.

Accompanyingthisbusinessstrategy,aselaboratedundertheChairman’sMessage,wesoughtforbettercontrolswithhands-onriskmanagementandcompliancepractices.Althoughwewereintheprocessofde-listingfromtheColomboStockExchangeinthereportingyear,wedidnotshy-awaybutremainedcommittedtogoodgovernance.Wealsosoughttobuildonourdedicatedinitiativeinsocialresponsibility,‘NDBCapitalScholarshipTrust’whichbearsmuchsignificanceonwhatwedowithinaknowledge-drivenindustry.

GRI - G4/ G4 - 1


this no douBt sets out the case for an organisation like ncap which

has the Best-fit expertise as a full serVice inVestment Banking serVice

proVider, strong Brand positioning and synergies comBined with a solid mainstay. we intend to Build on this

further in the ensuing years, more focused in our collaBoratiVe efforts

to promote a total solution. to this end, we will seek to strengthen our

structure with necessary inVestments to Be aBle to offer a seamless serVice


FINANCIAL RESULTSAmidstachallengingbusinesslandscape,NCAPGroupdeliveredasoundperformanceintheyearunderreview.Onaconsolidatedbasis,theincomeregisteredanimprovementof9%toRs.1,417MnasagainstRs.1,294Mnin2013whichisadjustedfortheincomederivedfromtheinvestmentofextraordinarycapitalgainsfromthedivestitureofdirectandindirectstakesinAVIVANDBInsurancePLC.Correspondingly,thenetprofitswereupby27%toRs.964MncomparedtotheadjustedlevelofRs.757Mnrecordedin2013.ThereturnonequityoftheGroupremainedpositiveandimprovedto15.6%asagainsttheadjusted13.3%in2013.

AtaCompanylevel,theincomefortheyearstoodat Rs.755MnwithnetprofitsatRs.665Mn,correspondingto24%and31%increaserespectivelyasagainsttheprecedingyear.

PROPRIETARY TRADINGNCAPintheyearunderreviewmaintainedawell-diversifiedportfolio.Theperceptiveinvestmentstrategies,systematicallyresearchedanddisciplined,supportedproprietarytradingactivitiestorecordsteadyreturns.Theequityportfolio,takingthecuefromtheyear’strendsontheColomboStockExchange,registereda35%return,performingabovetheindustrybenchmark.ThefixedincomeportfolioconsistingprimarilyoflisteddebenturespostedcapitalgainsofRs.79Mnduringtheyear.

INvESTMENT BANKINGRecognisedbytheprestigiousEuromoneyMagazineasthe‘BestInvestmentBank’inSriLankaforthethirdsuccessiveyear,NDBInvestmentBankcontinuedtodemonstrateitsexpertiseandsustaineditspositioningasaleadingarrangerandcorporateadvisorwithinthecountry’scapitalmarketdomain.

Onthedebtmarketfront,theInvestmentBankcontinuedtobeattheforefront,resilientlystandinggroundamidmoresubduedsettings,spurredlargelybyexcessliquidityinthemarketwithaccesstolowcostshorttermfunds.Thedebenturetransactionsmanagedthusfarsincethebudgetaryconcessionsextendedforlisteddebenturesin2013reachedRs.37Bn,includingthefourtransactionsmanagedintheyear.NDBIBalsoremainedactivewithintheequitymarket;managingoneofthelargest

964 mnOUTSTANDING PROFITABILITY

initialpublicofferofRs.838MnoutofthefewopenedforsubscriptionintheyearontheColomboStockExchange;andstructuringandmanagingtheRs.1.7Bnacquisition,of75%stakeinResusEnergyPLC,byaconsortium,comprisingACLCablesandTrydanPartners(Pvt)LtdtogetherwithNCAP.Thehighlightoftheyear,however,inlinewiththeNCAPGroup’seffortstobemorefinanciallyinclusivewasitsventureintoIslamicfinance–effectivelystructuringandplacingaWakalashorttermfacility,inaccordancewiththeShari’ahprinciplesforacompanyinthepowerandenergysector.

Progressivelyreachingouttocross-borderopportunities,NDBInvestmentBanksuccessfullyintermediatedandmanagedalandmarkloansyndicationofUSD50MnforapowerprojectinBangladesh,strikingsynergieswithNDBCapitalBangladesh,asubsidiarycompanyofNDBwhichcomesunderthemanagementpurviewofNCAP.

wEALTH MANAGEMENT AstheleaderinSriLanka’sassetandwealthmanagementindustry,NDBWealthManagementreinforceditspositioningintheyearunderreviewamongsttheinstitutionalandhigh-net-worthclientelewhilereachingouttotheburgeoningretailsegment.Acclaimedasthe“BestInvestmentManager”byWorldFinanceandas“TheBestAssetManagementCompany”inSriLankafor2014bytheGlobalBankingandFinanceReview,NDBWealthManagementaggressivelysoughtforgreaterconvergence,leveraginggroupsynergiesbetweenretailbankingandcapitalmarkets.

CEO’S MESSAGE (Contd.)


Inthereportingyear,markinganoutstandingperformance,theassetsundermanagement,byfarthelargestwithintheindustry,surpassedtheprecedingyearby36%toreach Rs.87Bnwhilstthemutualfundsperformedabovebenchmark,absorbingaround30%stakeoftheindustry’stotalassets.

SECURITIES TRADINGOurstockbrokingsubsidiarywaswellpositionedasanethicalandtrustedplayer,strengthenedbyNDBbrandandrepute,amidstanintenselycompetitivelandscapetotakeontheemergingopportunitieswithinthereboundingcapitalmarket.Therestructuredoperationasinitiatedintheprecedingyearwithbettersystemsandprocessesandeffectiveriskmanagement,supportedNDBSecuritiestosecureagreatershareofinstitutionalandhighnetworthclients,focusingparticularlyonbuildingtheforeigninvestorportfolio.Initsoutreachtotheretailmarket,NDBSecuritiescontinuedtoboltonNDB’svastbranchnetworkandsoughttobuildawarenessthroughinvestorawarenessprogrammesacrossthecountry,accessingandpenetratingdiversecustomersegments. Inthereportingyear,NDBSecuritiessucceededtoenhanceitsoperationalresultsandpoststrongturnoverandreturns,aheadofthemarketperformance.

PRIvATE EqUITYOurventureintoprivateequitygatheredmomentumintheyeartoplayacatalyticrolewithinthecountry’semergingeconomy,fillinginthefundinggapthatisnotmetbythecapitalmarketsorthecollateral-basedlendinginstitutions.Underthisinitiative,weestablished‘EmeraldFundSriLanka’,thecountry’sfirsteverdedicatedandlargestprivateequityfundwhichhaditsfirstclosingatUSD42.5MnandistargetingtoraiseUSD50Mnbyitssecondclosing.EmeraldFundseekstosupportthegrowingcapitalrequirementsofthesmallandmediumenterprises,encompassingnearlythreequartersofthebusinessesinthecountry.Theequityparticipationthroughthefundisproposedat20-30%alongwithvalue-additionintermsoftechnical,financial,managementandmarketingsupport,strivingtoextendanall-inclusivesolutiontobringoutthefullpotentialofthissector.

Thefundismanagedbyournewlyformedjointventure,NDBZephyrPartners,acollaborationwiththeNewYorkbasedglobalemergingmarketsinvestmentmanager,ZephyrManagementL.P.Structuredintwotranches,thefundhasalreadysecuredstrategicinvestorsincludingsignificantcommitmentsfromacclaimedmultilateralagencies;namely,InternationalFinanceCorporation(IFC),amemberoftheWorldBankGroup,DeutscheInvestitions-undEntwicklungsgesellschaftmbH(DEG)andNederlandseFinancierings-MaatschappijvoorOntwikkelingslandenN.V.(FMO).

BUILDING CAREERSTruetoouradage‘weprovidecareersnotemployment’,weworkedtowardsbuildingawell-rounded,multi-disciplinaryandskilledworkforceacrosstheNCAPGroupoperations.Weremainedselectiveinourrecruitmentprocess,seekingforbesttalentintheindustryespeciallytargetingtheSriLankanuniversitybatch-topgraduates.Thetrainingopportunitiesextendedwerewellstructured,notonlyaimingtofurtherthetechnicalskillsandmanagementcapabilitiesintheirrespectivecareerfields,but,alsostrengtheningtheirworkethicsandprofessionalism.

Intheyear,weextendedfocusedtrainingoncompliancerelatedareasincludingmoneylaundering,know-your-customerpoliciesandtheemployeecodeofethics.WeconductedanawarenessprogrammeontheForeignAccountTaxComplianceAct(FATCA)underUnitedStateslegislationforwhichwehavesubscribedintheyearunderreviewasoneofthefirstnon-bankorganisationstodoso.Wefollowedthroughwithourpracticaltrainingprogrammes;on-the-jobtraining,jobrotationsandtemporarycrossplacementswithinthegroupnetwork.Theperformancemanagementsystemfurthersupportedoureffortstobuildasolidteam,withconstructiveadviceoncareerdevelopment,duerecognitionandmeritbasedrewards.Ourstaffretentionisnoteworthywithalowerturnoverratio.Ineffect,withinamorestableSriLanka,someofourstaffmembers,evenformermembershaveoptedtoreturntotheCompanyaftercompletingtheiroverseaspost-graduatestudies;demonstratingourprogressivepoliciesinhumanresourcemanagement.


FUTURE PLANSInaprogressingeconomy,complementedbyanaccommodativemacroenvironmentwhichislikelytoprevailinthemediumterm,ironingoutanysocio-politicaluncertainties,theinvestmentclimateinSriLankaisexpectedtobebuoyantandevenbemoreattractiveintheyearsahead.Withgreaterawarenessandsophistication,ifaddressedcorrectly,willboostinvestorconfidenceandlevelofactivitywithinthecapitalmarket.Bothinstitutionalandretailsegmentsalikewillbeopentochangeandeagertoparticipate,embracingmoreviableinvestmentdecisionsthatwoulddiversifyandbettertheirprospects.

ThisnodoubtsetsoutthecaseforanorganisationlikeNCAPwhichhasthebest-fit–expertiseasafullserviceinvestmentbankingserviceprovider,strongbrandpositioningandsynergiescombinedwithasolidmainstay.Weintendtobuildonthisfurtherintheensuingyears,morefocusedinourcollaborativeeffortstopromoteatotalsolution.Tothisend,wewillseektostrengthenourstructurewithnecessaryinvestmentstobeabletoofferaseamlessserviceincludinganintegratedITplatformthatisabletobringtheentiregamutofproductsandservicesacrosstheNCAPGroupandourparent,NDB.Wewillalsolookatstrengtheningourteamwithemphasisonperformanceandlearningbasedcultureandwillseektoexpeditetheprocesstointroduceanemployeeshareoptionsscheme,makingwaytowardstheirlongtermwellbeingandinturn,securingtheircommitmentandloyaltytotheorganisation.

WewillfurtherourtieswithNDBCapital,BangladeshandseektobracetheinvestmentbankingservicesandsynergieswithintheemergingBangladeshimarket,targetingthefundinggapsinkeysectors.WewillreinforceourstrategicalliancewithDBSSingaporewhilstseekingforbusinessopeningsinotherpotentialSouthandEastAsiancountriesandintheMiddleEast.

THANK YOUIntheyear2014,withthesupportofallourstakeholders,wemovedtoastrongerplateau–redefiningouroperationsandnurturingourcorporatevaluestoaddressemergingissueswithinourindustry.Inthisquest,theseniormanagementandtheirrespectiveteamsacrosstheNCAPGroupremainedfocusedandresolutelymaintainedtheirprofessionalism.My

deepestappreciationisextendedtothemfortheirhardworkandenthusiasmandlookforwardtotheircontinuoussupportintheyearahead. MygratitudeisextendedtoourChairmanandtheBoardofDirectorsfortheirdirectionandleadership;withspecialthanksgoingouttoourformerDirector,Mr.IndrajithWickramasingheforhisserviceandcontribution.

WewishtothanktheofficialsattheMinistryofFinanceandtheExchangeControlDepartmentattheCentralBankofSriLankafortheircooperationandassistancegiveninoureffortstoestablishtheprivateequityinitiative.

Ourgratitudeiswithallourstakeholders;thankyou,foryourcontinuedcommitmentandtrustintheNCAPmission.

vajira KulatilakaChief Executive officerNDBCapitalHoldings

18thMay2015

CEO’S MESSAGE (Contd.)


THE CASE FOR INvESTMENT BANKINGWithinthepost-conflictsettings,SriLankaissettodeliveronitsgrowthaspirationsofreachingtheupper-midincomethreshold-growingabove8%inthemediumtermtobeaUSD100BneconomywithapercapitaincomereachingtoUSD4,000by2016.Macroeconomicenvironmentisbeingshapedwithproactivesocio-economicpoliciesandnecessaryinfrastructureinplace,layingthefoundationforavibranteconomy.Yet,thepathtoprogressisnotwithoutchallenges.Thetaskathand,aswellrecognised,istodevelopadynamicprivatesectorwithastrongcapitalbasetospurentrepreneurism.Thisisanimperative,ifthecountryistofullyrealiseitsambitioustargets.

Inthislight,financialsectorwillhavetotakeafocalroleinraisingthenecessarycapitalandboostingprivatesectorcapacityforkeyinvestments.Yet,theorthodoxbankingsystemsingle-handedlycannotsupportthegrowingneedsforlongtermcapital.Thecapitalmarketsbothequityanddebt,therefore,willbedecisiveinfacilitatingtheshortfallinlong-termcapital,attractingbothdomesticsavingsaswellasforeigncapitalandthuslayingthenecessaryscaleforgreatereconomicaction.

Takingonanintermediaryroleinmobilisingfundswithinthecapitalmarkets,investmentbankingoffersanarrayofnon-conventionalproducts-debtandequitysecurities,structuredfinance,advisoryservices,mergersandacquisitions,stockbroking,financialrestructuring,valuationsandmarketresearch.Investorsegments-beitinstitutional,high-net-worthortheretailmarketcanrelyandcalluponinvestmentbankingtoextendappropriatefundingandinvestmentsolutionsandadvisoryservicestomeettheirdiverserisk-returnprofileneeds.Thisbearsmuchsignificancewithintheemergingbusinesslandscape.

NCAP AT THE FOREFRONTFormerlyalistedentitypriortothede-listingoftheordinaryshareswhichcameintoeffecton26thJanuary2015,NDBCapitalHoldingLtd(NCAP)isasubsidiaryoftheNationalDevelopmentBank(NDB).IncorporatedinOctober1983andrestructuredandre-launchedinJune2012,NCAPistheparentcompanyofafull-serviceinvestmentbankingcluster-NDBInvestmentBankLtd,NDBSecurities(Pvt)Ltd(formerlyknownasNDBStockbrokers(Pvt)Ltd),NDBWealthManagementLtd

andNDBZephyrPartnersLtdThefoursubsidiariesfocusonthefee-basedservicesinequitycapitalmarket,debtcapitalmarket,mergersandacquisitions,wealthmanagement,privateequitymanagementandstockbrokeringwhilstthefundbasedactivitiessuchasunderwriting,privateequityinvestments,listedequityandfixedincomeinvestmentsdirectlycomeunderthepurviewoftheCompany.

ThefirstthreesubsidiariesmentionedabovearefullyownedandNCAPinthereportingyear2014,establishedajointventurewitha60%stake-NDBZephyrPartnersLtdtomanagetheprivateequityfundlaunchedintheyear.

Wellrecognisedasamultifacetedinvestmentbankingorganisation,NCAPGroupisfullygearedtounleashitspotentialandleadthecapitalmarketinthecountry.Fullysupportedbythepowerofthebrand,concertedexpertiseandbestpracticesledbyatop-notchteamandstrategiclinkstowellacclaimedinternationalfinancialinstitutions,NCAPisattheforefrontoftheindustry.Backedbybothfeeandfundbasedinvestmentbankingexpertise,NCAPisabletosource,structureandplacethefundingsupportforcorporatesandlargeinfrastructureprojectsalongwithadvisoryservicestotakeoncomplextransactionsonthecapitalmarketincludingmergersandacquisitions,restructuringandstart-ups.

INvESTMENT BANKING BUSINESSGRI - G4/ G4 - 4

G4 - 6G4 - 8G4 - 9

G4 - 13

NCAP GROUPOUR BUSINESSES

FEE BASED OPERATIONSDistributionofEquityDistributionofDebtInstrumentsCorporateAdvisoryMergersandacquisitionsWealthmanagementStockbrokeringPrivateequitymanagement

FUND BASED OPERATIONSPrivateEquityInvestmentsListedEquityInvestmentsStructuredEquityInvestmentsFixedIncomeInvestmentsUnderwritingPropriterytradingofdebtandequity


NDB Capital HolDiNgs ltD (NCap)COMPANY PROFILE: NCAPprovidesfullserviceinvestmentbankingservices,comprisingbothfundandfeebasedactivities. The four subsidiaries focus on the fee-basedservicesininvestmentbanking,wealthmanagement,stockbroking,andprivateequitymanagement;whilstthefundbasedactivitiessuchasunderwriting,privateequityinvestments,listedequityandfixedincomeinvestmentsdirectlycomeunderthepurviewoftheCompany.

DIRECTORATE:Mr.AshokPathirage(Chairman)Mr.RajendraTheagarajahMr.VajiraKulatilaka(CEO)Mr.SarathWikramanayakeMs.AruniRajakarierMr.MalingaArsakularatneMr.FaizanOzman(Appointedw.e.f.13/1/2015)Mr.IndrajitWickramasinghe(Resignedw.e.f.19/9/2014)

CLOSE UP

100%

NDB ZepHyr partNers laNka

(pvt) ltD

60% 77.8%

99.9%

100% 100% 100%


NDB iNvestmeNt BaNk ltD (NDBiB) NDB WealtH maNagemeNt ltD (NDBWm)COMPANY PROFILE: TheflagshipcompanyoftheNCAPGroup,NDBIBspecialisesindebtandequitystructuringanddistribution,IPOs,corporaterestructuring,mergersandacquisitionsandarrangingprojectfinancingforbothlistedandnon-listedentities.

DIRECTORATE:Mr.SarathWikramanayake(Chairman)Mr.RajendraTheagarajahMr.BuwanekaPereraMr.VajiraKulatilakaMr.DarshanPerera(CEO)

COMPANY PROFILE:NDBWMlicensedbytheSECofSriLankaprovideswealthmanagementsolutionsandmutualfundsforinstitutions,high-net-worthinvestorsandtheretailmarket.

DIRECTORATE:Mr.SarathWikramanayake(Chairman)Mr.RajendraTheagarajahMr.VajiraKulatilaka

NDBIB PerformaNce

050100150200250300350400

Rs.Mn

2013 2014

Revenue (Rs. Mn) Profit (Rs. Mn)

NDBWm PerformaNce

050100150200250300350400

Rs.Mn

2013 2014


Investments 52%

Wealth Management 25%

Investment Banking 12%

Stock Brokering 12%GrouP SeGmeNtal reveNue 2014

coNSolIDateD PerformaNce

0200400600800

1,0001,2001,4001,600

Rs.Mn

2013 2014

Group Revenue (Rs. Mn) Group Profit (Rs. Mn)


NDB seCurities (pvt) ltD (NDBs) NDB ZepHyr partNers ltD (NDBZ) COMPANY PROFILE: NDBSafullmemberfirmoftheCSE,providesinvestmentadvisoryservicesandtradingoflistedequityanddebtsecurities.

DIRECTORATE:Mr.RajendraTheagarajah(Chairman)Mr.VajiraKulatilakaMs.AruniRajakarierMr.FaizanOzman(Appointedw.e.f.2/2/2015)

COMPANY PROFILE: NDBZisajointventurewithZephyrManagementL.PintheUSA.Incorporatedon24thDecember2014inMauritius,NDBZmanagesprivateequityfundsandextendsadvisoryservicesonstrategicplanning,marketaccess,accesstotechnology,financerestructuringanddevelopingthemanagementteamtoinvesteecompaniesinthesmallandmediumenterprisessector.

DIRECTORATE:Mr.RajendraTheagarajahMr.ThomasCorcoranBarryMr.VajiraKulatilakaMr.FaizanOzmanMr.MukulGulatiMs.DilshaadRajabaleeMs.ResmahBibiMandary

CLOSE UP (Contd.)

GRI - G4/ G4 - 15G4 - 16

NDBS PerformaNce

020406080100120140160180

Rs.Mn

2013 2014



setWe are setting in place

the necessary requirements and developing our expertise that Will

see us revolutionize the industry.


Evenwithinconsistenciesandunevengrowthpatternsacrossregionsandcountries,theworldeconomycontinuedonarecoverypathintheyear2014.Thiscoupledwithpositivetrendsinthemacroeconomicenvironment,setoutafavourableplatformwithinthedomesticeconomyforgreatereconomicactivitytowardssteadiergrowth.

Markingasuccessfulyear,inthisbusinessbackdrop,NCAPrallieditsGroupexpertiseandreinforceditspositioningasasolidinvestmentbankinggroupinthecountry.Oureffortswerefirmandfocusedindeliveringourfive-yearstrategy,formulatedfortheperiod2012-2017.

Seekingontodevelopboththebreadthanddepthoftheoperations,welookedcloselyinthereportingyear,atbringinginan-all-inclusiveproductsolutionwithbroaderscopeandvalue-addition.Weleveragedonourparent’sstrength,brand,synergieswithinthenetworkandourstrategicalliances.We

MANAGEMENT DISCUSSION AND ANALYSIS / OUTLINE

soughttobuildourteamsacrosstheGroup,extendingthebestintrainingandworkplaceopportunities.Weremainedcommittedtoupholdinggoodgovernance,complianceandriskmanagementwhilstseekingtotakeonamorestrategicapproachtooursocialresponsibilityinitiatives.

Ourperformanceintheyearwascommendable,withsteadygrowthinallmajorkeyperformanceindicators.Wemaintainedasattheyear-endasoundfinancialpositionandpositivecashflows.

Backed By a diVersified product offering, proficient team, highly esteemed Brand, strong parent and ValuaBle strategic alliances including ties with multi-lateral agencies will enaBle ncap and its network of suBsidiaries to aVail the opportunities present in the emerging economy


MANAGEMENT DISCUSSION AND ANALYSIS / ECONOMIC REvIEw

ECONOMIC ENvIRONMENT

GLOBAL ECONOMIC OUTLOOK

Source: IMF World Economic outlook, october 2014

Globaleconomicrecoverycontinuedtotakeplacein2014,mainlydrivenbyhigherthanexpectedeconomicgrowthintheUnitedStates.However,positivesentimentgeneratedbytherevivaloftheworld’slargesteconomywasdampenedbyeconomicandpoliticalcriseselsewhereintheworld.TheEurozonewitnessedstagnantgrowthacrosstheboardwithtraditionalpowerhousesGermanyandFrancedeclaringlacklustergrowthfiguresduringtheyear.Inaddition,Japancontinuedtoremainina‘lowgrowth–lowinflation”environment,despitethecontinuedeffortofPrimeMinisterShinzoAbetostimulatetheeconomy.

Intermsofemergingeconomies,highlydivergentgrowthrateswerevisiblein2014fortheBRICnations.GrowthinChinaandIndia(bothnetoilimporters)was7.4%and5.6%respectivelywhilstRussiaandBrazil(netoilexporters)wereestimatedtohavewitnessedfarmoremoderategrowthlevelsof0.2%and0.3%respectivelyduringtheyear.

TheInternationalMonetaryFundpredictsthatglobalgrowthwouldreach3.8%by2015,basedontheassumptionthataccommodativemonetaryandfiscalpoliciescontinuetoremaininplaceinkeyeconomies.Thisprojectionisalsobasedonthepremiseofdeclininggeo-politicaltensions,whichmaynotbeavalidassumptionbasedoneventswitnessedinearly2015.

ecoNomIc GroWth (%)

0%

1%

2%

3%

4%

5%

6%

%

Globalgrowth Advancedeconomies growth

Emerginganddevelopingeconomiesgrowth

2013 2015 (E)2014 (E)


MACRO-ECONOMIC OUTLOOK FOR SRI LANKA

Source: Road map of the Central Bank of Sri Lanka, 2015/Annual Report of Central Bank of Sri Lanka, 2014

MANAGEMENT DISCUSSION AND ANALYSIS / ECONOMIC REvIEw (Contd.)

STRONG GROwTH DRIvEN BY GOvERNMENT SPENDINGDuring2014,SriLanka’sGrossDomesticProductexpandedby~7.4%,whichwassignificantlyhigherthantheglobalaveragegrowthrateof3.3%.Inaddition,growthachievedduringtheyearwasalsohigherthanSouthAsianpeerssuchasIndia,PakistanandBangladesh.


BalaNCe of paymeNts

2013:$985mn

2014:$1.4bn

2015(E):$2.0bn

BuDget DefiCit

2013:5.8%

2014:5.2%

2015(E):4.6%

private seCtor CreDit groWtH

2013:8.0%

2014:8.8%

2015(E):18.0%:

HeaDliNe iNflatioN

2013:4.7%

2014:3.3%

2015(E):3.0%

real gDp groWtH

2013:7.2%

2014:7.4%

2015(E):8.0%

Despitethefragilerecoveryoftheglobaleconomy,the SriLankaneconomycontinuedtogrowatanimpressivepace,drivenbylargescalegovernmentspendingoninfrastructurerelatedprojects.EconomicgrowthwasalsosupportedbyanexpansionarymonetarypolicyaswellasanimprovedBalanceofPaymentsposition.Fiscalconsolidationcontinuedasthebudgetdeficitwastrimmed,whilsttheratioofpublicdebttoGDPalsodroppedcomparedto2013.

real GDP GroWth (‘14)

0

2.001.00

3.004.005.006.007.008.009.00

World AdvancedEconomies

Emergingmarket and developingeconomies

Afghanistan Bangladesh Bhutan India Maldives Nepal Pakistan SriLanka

%


TheservicessectorcontinuedtoremaintheleadingcontributortoGDPin2014,withashareof58%ofGDP,whilsttheIndustrialandAgriculturalsectorscontributedto32%and10%ofGDPrespectively.Intermsofgrowthduringtheyear,theIndustrialsectorpostedthehighestgrowthof11.4%in2014,mainlyduetohighgrowthinconstructionrelatedactivities.Theservicessectoralsoexpandedby6.5%duringtheyear,buttheAgriculturalsectorwitnessedonlymoderategrowthof0.3%mainlyduetoadverseweatherconditions.

Thenationcontinuestoreapa‘peacedividend’asaresultoftheconclusionofthethreedecadelongcivilwar,withpostwareconomicgrowthremainingsignificantlyhigherthangrowthachievedduringtheconflict.ThishighlevelofeconomicgrowthresultedinpercapitaincomealmostdoublingtoUSD3,625in2014fromUSD2,057in2009.


However,itshouldbenotedthateconomicgrowthwasmainlydrivenbyhighlevelsofgovernmentexpenditure,asthestatecontinuedtoinvestinlargescaleinfrastructureprojectsrelatedtohighways,railways,ports,aviation,urbanbeautificationandotherinvestments.TheincreasedinvolvementofthegovernmentindomesticinvestmentsisindicatedbyCapitalexpenditureandnetlendingaccountingfor~19.5%ofgovernmentexpenditurein2014,vis-à-vis~18.8%in2009.


Capitalexpenditureandnetlendingaccountedforthelargestshareofgovernmentexpenditure(excludingdebtrepayments)in2014.Suchinvestmentswerefinancedmainlythroughdomesticandforeignborrowingsbutalsothroughforeignaidandgrants.

FISCAL CONSOLIDATIONDespitehighexpenditureonlargescaleinfrastructureprojects,thefiscaldeficit(asapercentageofGDP)continuedtodecline,mainlyduetohigheconomicgrowthwhichoutpacedthegrowthinthefiscaldeficitinthepostwarperiod.

Salaries and wages 15.8%

Interest payments 18.0%

Other recurrent expenditure 17.4%

Public investment 18.8%

Debt repayments 30.0%GoverNmeNt exPeNDIture -2009

Salaries and wages 18.2%

Interest payments 18.8%

Other recurrent expenditure 18.3%

Public investment 19.5%

Debt repayments 26.1%GoverNmeNt exPeNDIture -2014

real GDP GroWth (1977 - 2014)

0

2.001.00

3.004.005.006.007.008.009.00

%

1977-1989 2011-20142007-20101996-20061990-1995



Intermsofindividualcomponentsoffiscalpolicy,governmentrevenueincreasedto14.5%ofGDPin2014(from13.3%in2013).However,thiscontinuestobebelowtherevenuecollectionof15.6%ofGDPachievedin2008(immediatelypriortotheconclusionofthecivilwar).Ontheotherhand,governmentexpenditurehasincreasedto20.0%ofGDP,mainlyasaresultoflowerrecurrentexpenditure.


reveNue aND exPeNDIture (% of GDP)

10

15

20

25

30

%

2008 2009 2010 2011 2012 2013 2014(E)

Revenue (% of GDP) Expenditure (% of GDP)


ThelowerfiscaldeficitcoupledwithhighereconomicgrowthhasresultedinadeclineinpublicdebtasapercentageofGDP,from86.2%in2009to75.5%in2014.TheCentralBankenvisagesthatthisfigurewillcontinuetodecline,ultimatelyreaching60.0%by2020.


Foreigndebtcontinuestoremainanimportantsourceoffundingforthegovernment,with~42%ofoutstandingdebtin2014beingobtainedfromforeignsources.TheCentralBank

forecastsareductionofthisfigureto25%by2020,inordertoensurelowerrelianceonforeignfunding.

BuDGet DefIcIt (% of GDP)

-10

-8

-6

-4

-2

0

%

2010 2011 2012 2013 2014(E)

GoverNmeNt DeBt to GDP

0

20

40

60

100

80

120

%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


Thisrelaxedstanceonmonetarypolicyresultedinbroadmoneygrowthof13.3%andprivatesectorcreditgrowthof8.8%in2014.

Source: Central Bank of Sri Lanka, MVS money brokers

Asillustratedabove,theyieldcurveforTreasurybillsandbondswitnessedadownwardshiftin2014.Onaverage,yieldsacrossmaturitiesfortreasuriesdeclinedbyapproximately200basispointsduringtheyear,whichinturnledtoloweraverageweightedlendingratesandaverageweighteddepositrates.



LOOSENED MONETARY POLICYTheCentralBankcontinuedtomaintainlowpolicyratesin2014inordertospureconomicgrowth.The364dayTreasurybillyieldwas6.0%atend2014,comparedtoayieldof8.3%atend2013.Inaddition,theAverageWeightedLendingRatedeclinedto11.9%(versus15.2%asatend2013),whilsttheAverageWeightedDepositRatedeclinedto6.2%(versus9.4%asatend2013).


YIelD curve - treaSurY BIllS aND BoNDS

4

6

8

10

12

%

91days

182days

364days

3years

5years

8years

15years

10years

31.12.2013 31.12.2014

comPoSItIoN of PuBlIc DeBt

0

20

40

60

80

100

%

2004 20142009

Domestic Debt (%) Foreign Debt (%)

INtereSt rateS

0

4

8

12

20

16

%

AverageWeighted

LendingRate

AverageWeighted

DepositRate

End 2013 End 2014

PrIvate Sector creDIt GroWth

-10

0

10

20

30

%

2000 2005 2009 2014


MODERATE INFLATIONDespitelowpolicyratesandhigheconomicgrowth,inflationremainedlowatarateof3.3%in2014.ThiswaswellbelowtheCentralBank’stargetedlevelofinflationof4-6%fortheyearandwasmainlyachievedasaresultofasharpdeclineinenergypricesaswellaslowerpricesofallmajorcommoditiesintheinternationalmarket.

Source: Bloomberg

Globaloilpricesdeclinedby~43%during2014,withasignificantpricefallvisibleduringthesecondhalfoftheyear.InlinewithdecliningCrudeoilprices,priceofothercommoditiessuchasSteeldeclinedaswell.BetweenJanuaryandDecember2014,Steelpricesdeclinedby~11%duringtheyear,fromUSD726/MTtoUSD644/MT,asillustratedbelow-

Source: http://www.worldsteelprices.com/

2014wasthe6thconsecutiveyearinwhichaverageannualinflationwasrecordedatsingledigitlevelsandtheCentralBankexpectstomaintainthisinthemediumterm,withaninflationrateof2-4%beingtargetedfor2015.


BALANCE OF PAYMENTSThecurrentaccountdeficitcontractedto2.7%ofGDPin2014,comparedto3.9%ofGDPin2013.Thiswasdespitethetradedeficitincreasingby8.9%toUSD8.3Bnin2014(fromUSD7.6Bnin2013).Themainfactorsthatresultedinalowercurrentaccountdeficit(despiteahighertradedeficit)wereincreasedearningsfromtourism,higherinwardremittancesandincreasedinflowsfromInformationandCommunicationTechnology(ICT)andtransportationservices.

However,despitethecontractionfrom2013,thecurrentaccountdeficitcontinuedtobeabovetherecordlowdeficitof0.5%ofGDPachievedin2009.


BreNt cruDe PrIce (uSD/BBl)

50

70

90

110

130

150

Jan-14

Feb-14

Mar-14

Apr-1

4

May-14

Jun-14

Jul-1

4

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

GloBal comPoSIte carBoN Steel PrIce (uSD/mt)

600

650

700

750

800

Jan-14

Feb-14

Mar-14

Apr-1

4

May-14

Jun-14

Jul-1

4

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

averaGe aNNual INflatIoN (%)

0

5

10

15

%

2000 201420092005



TheCapitalandFinancialaccountalsoimprovedin2014duetosignificantinflowsduringtheyearincludingForeignDirectInvestmentof~USD1.7Bn,netinflowstotheColomboStockExchange(CSE)of~USD184Mnandborrowings(publicandprivate)of~USD4.85Bn.ThisresultedinaBalanceofPaymentssurplusofUSD1.4Bnbeingrecordedin2014,vis-à-visasurplusofUSD985Mnin2013.

curreNt accouNt DefIcIt (% of GDP)

-10

-5

0

%

2000 2005 2009 2014

Merchandise exports 48%

Earnings from tourism 10%

Transportation services 8%

ICT services 3%

Other services 2%

Worker remittances 29%curreNt accouNt INfloWS - 2014

Merchandise exports 58%

Earnings from tourism 3%

Transportation services 7%

ICT services 2%

Other services 3%

Worker remittances 27%curreNt accouNt INfloWS - 2009

Moreover,thecompositionofthecurrentaccounthaschangeddrasticallybetween2009and2014.Thecontributionoftourismrelatedearningstothecurrentaccounthasincreasedsignificantlyduringthisperiod,attheexpenseofearningsfromMerchandiseexports.Inaddition,contributionfromICTservicesandworkerremittanceshasalsoincreasedasillustratedbelow.

Source: Road map of the Central Bank of Sri Lanka, 2015

ExCHANGE RATETheRupeeremainedstableagainsttheUSDin2014,mainlyasaresultofthestrengthenedBalanceofPayments(BOP)position.ThisstrengthenedBOPpositionallowedtheCentralBanktoincreasegrossreservestoahistorichighofUSD9BninJune2014.However,reservesdeclinedinthesecondhalfof2014toalevelofUSD8.2Bnbytheendoftheyear,whichequatedto5.1monthsofimports.ThiswasdeemedadequatebytheCentralBanktomaintainstabilityoftheRupee.


Source: Bloomberg


INDex returNS (2014)

5,000

6,000

7,000

8,000

1/2/14

2/2/14

3/2/14

4/2/14

5/2/

14

6/2/14

7/2/14

8/2/14

9/2/14

10/2/14

11/2/14

11/2/14

ASPI ( Colombo)

MSCI Emerging Mkts (MXEF)

MSCI World (MXWO)

traIlING P/e ratIoS (31/12/2014)

5

10

15

20

25

CSE

(Colom

bo)

BSE50

0(M

umba

i)

KSE

(Karachi)

JCI

(Jakarta) SET

(Ban

gkok

)

PASH

R(M

anila)

VNINDE

X(HoCh

iMinh)

MXE

F(M

SCI

Emerging

markets)

MXW

O

(MSC

IWorld)

exchaNGe rate (rS.:uSD)

100

110

120

130

140

150

2/24

/201

0

2/24

/201

1

2/24

/201

2

2/24

/201

3

2/24

/201

4

4/24

/201

0

4/24

/201

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14

EqUITY MARKETMarketsentimentimprovedin2014withtheAllSharePriceIndex(ASPI)crossingatwoyearhighof7,500withanaveragedailyturnoverofRs.1.3Bn(versusanaverageturnoverof Rs.785Mnin2013).Growthincorporateperformancesupportedbythecontinueddeclineintheinterestratesresulted in the market gaining momentum during the second halfoftheyear.Retailactivitysawanimprovementincomparisonto2013,whileforeignbuyinggrewtoanall-timehighofRs.105Bn(versusRs.84Bnin2013).Asaresultofbullishsentiment,theASPIgrewby17.5%andmarketcapitalizationcrossedRs.3trillionduringtheyear.

Source: Bloomberg

Duringtheyear,Rs.3.3Bnwasraisedthrough5InitialPublicOfferings(IPOs)whilstRs.11.2Bnwasgeneratedvia13rightsissues.

Asat31stDecember2014,thetrailingPricetoEarningsratiooftheColomboStockExchangewas13.4xwhilstPricetoBookvaluewas1.9x,bothsignificantlybelowmultiplesachievedduringtheBullRunin2010.Evidencesuggeststhatmultiplesofregionalpeersarealsosignificantlyhigher,whichindicatesthattheCSEcontinuestobeanundervaluedmarketwithstronggrowthpotential.Inaddition,thecurrentenvironmentoflowinterestratesisexpectedtoaugurwellforcontinuedgrowthintheequitymarket.

Source: Bloomberg


Furthermore,themoreliquidgovernmentsecuritiesmarketprovidedattractivereturnsacrossdifferentmaturitiesasillustratedbelow:-

Source: www.ndbch.com/

TheloosemonetarypolicystanceundertakenbyCBSLresultedinhealthyreturnstofixedincomeportfoliomanagers.

Longerdatedgovernmentsecuritiesbenefitedfromsignificantcapitalgainsonaccountofthe~200bpsreductioninpolicyratesaswitnessedbythe~14.5%and~18.1%annualreturnrecordedbythebenchmarkNDBIBCRISIL3-yearand5-yearTreasuryBondindicesrespectively.Shorterdatedgovernmentsecuritiesrecordedreturnsof~6.8%and~8.4%for2014aswitnessedbythebenchmarkNDBIBCRISIL91-dayand364-dayTreasuryBillindices.

fuNDS raISeD throuGh DeBeNtureS (rS. BN)

0

5

10

15

20

25

30

35

Rs.Bn

LicensedCommercialBanks

LicensedSpecial-izedBanks

LicensedFinanceCor-porations

NonFinan-cialInstitu-tions

2013 2014

NDBIB-crISIl INDex returNS (2014)

7,500

8,000

8,500

9,000

9,500

1/Jan/14

1/Feb/14

1/Mar/14

1/Ap

r/14

1/May/14

1/Jun/14

1/Jul/1

4

1/Au

g/14

1/Sep/14

1/Oc

t/14

1/No

v/14

1/De

c/14

91 Day T-Bill

3Y T-Bond

364 Day T-Bill

5Y T-Bond

DEBT MARKETAsignificantregulatorychangetookplaceinthecorporatedebtmarketin2014,asforeigninvestorswereallowedtoinvestinnon-listeddebentures(inadditiontolisteddebentures)throughtheSecuritiesInvestmentAccount.

However,fundsraisedthroughcorporatedebenturesdeclinedtoRs.54.2Bnin2014,comparedtoRs.68.3Bnin2013.But,theincreasedliquidityinthecorporatedebenturemarketwitnessedin2014gavesignificantdiversifyingopportunitiestotheactiveinvestorsinSriLanka’scapitalmarket.

Source: Colombo Stock Exchange (CSE)


MANAGEMENT DISCUSSION AND ANALYSIS / BUSINESS REvIEw

NCAP STRATEGY, TARGETS AND ACHIEvEMENTS

risks opportuNities

▪ Uncertaintieswithinthepoliticalscenario▪ Uncertaintiesinfiscalandmonetarypolicies▪ Increasingregulatorydemands▪ Increasingcompetitionintheindustry▪ Increasingcomplexityinthewaybusinessesoperate▪ Changesinsocio-culturalattitudesandlifestylethatmay

swaytheintegrityandprofessionalismoftheindustry▪ Changeswithintheoperationsandintegrityissuesof

clients,strategicpartnersandsuppliers

▪ ThereboundingglobaleconomyandSriLankaneconomymovingtowardsstablegrowthinthemediumterm

▪ PositiveinvestorsentimentsandincreaseinFDIsintodiversesectorsoftheeconomy

▪ Macroeconomicpoliciesskewedtowardsdevelopingthecapitalmarkets

▪ Strengthofthebrand,parentsupport,groupsynergiesandtie-upswithstrategicpartners

▪ Talentandprofessionalismoftheteamandtheabilitytoattractthetopgraduatesandprofessionalstotheteam

strategiC priorities

Product Offer

▪ Encourageproductbundlingandcross-sellingforatotalfinancialsolution▪ Engageinlargescale,complex,highlyvisibledealsinequityanddebtmarkets▪ Designandintroducenewstructuredfinanceproducts▪ ShowcasetheGroup’sexpertisetomarketproductsandservices▪ Participateinlargescalepublicsectorprojectsanddeals

Human Resources

▪ Recruitthebestandnewtalentfromlocalandforeignuniversities▪ Advocateon-the-jobtraining,rotationsandcrossplacementstoroundoffemployeeskills▪ Extendtechnicaltrainingtodevelopspecialisedfunctionalskills▪ Extendtrainingtodevelopsoftskills-presentationandnegotiationskills▪ Encouragestafftoobtainpostgraduateandprofessionalqualifications▪ Initiateanemployeeshareoptionschemeandaperformancebasedprofitsharingscheme▪ Successionplanning-leadershipdevelopmentforclearlyidentifiedemployees

Group Synergies

▪ Strengthentieswithparent,NDBandleverageontheNDBbrand▪ Placemoreemphasisoncross-sellingwithintheNDBGroup▪ MaximiseopportunitiesthroughtheNDB’soutreachacrossthecountry▪ Integrateandcentraliseprocurementandfinancefunctionsforcosteffectiveness▪ SeekandestablishgreatercollaborationswithintheGroup▪ CollaboratewithNDBCapitalBangladeshinmutuallybeneficialprojects


strategiC priorities

Strategic Alliances

▪ Pursueontheopportunitieswithstrategicpartner,DBSBank,Singapore▪ Seeknewstrategicpartnershipswithregionalandglobalfinancialinstitutionsandother

multilateralagencies▪ Networkwithlocalfinancialinstitutionsformutuallybeneficialprojects-syndications,

IPOs▪ Buildanetworkofinstitutions/individualsasdistributors▪ Developtieswithpotentialinvestorsforprivateequityplacements,IPOs,acquisitionsand

foreign direct investments

Sustainability Focus

▪ Createsustainablevalue,reachingouttostakeholderaspirations▪ Developriskmanagementdashboardsasaneffectivemitigatorymechanism▪ Strengthenthecompliancefunctionandinternalisewithinthedailyoperationsandteams

acrossthegroup▪ Closelyfollow-upandensurethatinvestors,strategicpartnersandsupplierstoconformto

bestpracticesinbusiness▪ Continuetoupholdgoodgovernanceandethicsasprescribedforlistedentities▪ Greaterinvestmentandcommitmenttostrategicphilanthropicinitiatives

TARGETS vS. ACTUAL 2014

Target: Rs. 94 Bn

Target: Rs. 828 Mn

Target: 13.5%

Actual: Rs. 97 Bn

Actual: Rs. 964 Mn

Actual: 15.6%

assets uNDer maNagemeNt

profit after tax

returN oN equity %


NCAP OPERATIONAL PERFORMANCE

MANAGEMENT DISCUSSION AND ANALYSIS / BUSINESS REvIEw (Contd.)

private equityEquityinvestmentsinsmallandmediumcompanieswithhighgrowthpotentialalongwithvalueadditionintermsofmarkets,technology,finance,planningandmanagement.

NCap proDuCt aND serviCe offeriNgs

proprietary traDiNgProprietarytradingdeskforequityandfixedincometocapitaliseonshort-termvolatilitiesandarbitrageopportunitiesinthemarket.

uNDerWritiNgLicensedunderwriterforlisteddebtandequitysecuritiesbytheSECofSriLanka

otHer iNvestmeNtsMaintainexposuretolistedequities,structuredequities,fixedincomesecurities,moneymarketandincome funds


key performaNCe iNDiCators - NCap group 2014 2013 groWtH

Revenue(Rs.Mn) 1,417 1,294 9%

ProfitAfterTax(Rs.Mn) 964 757 27%

NetProfitMargin 68% 59% 16%

ReturnonEquity 15.6% 13.3% 18%

Note:2013figureshavebeenadjustedtoexcludeRs.175Mnone-offinvestmentincomeearnedfromthecashgeneratedthroughthedivestitureofAvivaNDBInsurancePLC

private equity▪ Establishedajointventure,partneringwithawell-recognisedemergingmarketfundmanagerfromUSA.▪ EstablishedthelargestdedicatedprivateequityfundinSriLanka▪ CommittedUSD12MntothefundwiththebalanceUSD30.5Mnbeingcommittedbymultilateral developmentfinancialinstitutionsandotherstotalingtoUSD42.5Mnatthefirstclose.

equity traDiNg▪ Tradingportfoliopostedanannualreturnof35%,surpassingtheindustryperformance.

struCtureD equity iNvestmeNt▪ InvestedasumofRs.730MnasNCAPcontributionintheacquisitionof75%stakeofResusEnergyPLC,partneringwithACLCablesPLCandTrydanPartners(Pvt)Ltd

De-listiNg▪ Initiatedtheprocesstode-listtheCompanyfromtheCSEinordertonotbeinviolationofthemandatoryrequirementofholding20%bythepublic.

NCapoperatioNal HigHligHts -2014


OvERvIEwIntheyearunderreview,NCAPremainedsteadfastandhands-onindeliveringitsstrategicpriorities.TheNCAPGroupmovedaheadfirmlyplacingitsfinancialprowessinexecutingsomeoftheleadingtransactionsindebtandequitymarkets,advisoryservices,wealthmanagement,mutualfundsandstockbroking.Musteringthesynergies,NCAPadvocatedcross-sellingandproductbundlingwithintheGroupwhichcoupledwitharelationshipbasedclientservicingapproach,supportedtomeetthediscerningneedsofdiverseinvestorsegments.

Movingtowardsthemilestonelevel,thetotalassetsundermanagementduringtheyearregisteredasteadygrowthof38%toRs.97Bn.Outofthetotalassets,nearly90%wasaccountedforbythewealthmanagementactivities.Returnsondebtandequitytrading,capitalgainsandotherinvestmentsremainedsoundandpostednoteworthyincreases.

Onthecostside,NCAPremaineddisciplinedandconcentratedonmaintainingaleancoststructure.CentralisationoftheprocurementprocesswiththeparentNDBwassoughtafter,enablingeffectivenegotiationsonthetermsandconditionsincludingonpricing.TheothercentralisedfunctionswithrespecttoIT,governanceandriskmanagementfurthersupportedoureffortstomanageoverheadcosts.Currently,NDBGroupisalsoworkingoncentralisingthefinancefunctionalongwithprocurementcoveringbothproductsandservices.

Withinthisoperationalscenario,NCAPdeliveredstrongresults,leadinguptoincreasesinrevenueandprofitabilityforboththeCompanyandattheconsolidatedlevel(2013figureshavebeenadjustedtoexcludeRs.175Mnone-offinvestmentincomeearnedfromthecashgeneratedthroughthedivestitureofAvivaNDBInsurancePLC).

DE-LISTINGCoincidingwiththemandatorypublicfloatof20%asstipulatedbytheSECofSriLankacomingintoplayintheyearunderreview,NCAPinitiatedtheprocesstode-listitsordinarysharesfromtheCSE.Themajorityshareholder,ourparentNDB,with99.6%ownershipatthetimeofferedtopurchasethe

minoritysharesatafairpriceofRs.600pershare.NecessarydocumentationwasprocessedintheyearandExtraordinaryGeneralMeetingwascalledupontoendorsetheBoarddecision.

Thede-listingcameintoeffecton26thJanuary2015.Plans,however,areunderwaytore-listtheCompanyontheCSEwithinthenextthreeyears.ValuationofsharesatthispointisexpectedtobemorereflectiveofthetruepotentialoftheNCAPGroup,especiallygiventhatourfiveyearstrategicplan,runningupto2017,wouldhavebeenfullyimplementedandoutcomesthereinachievedasaspired.ThismovewillbenefitbothNCAPandNDB.

PRIvATE EqUITYRefer Private Equity, Pages : 57-58

PrivateequityisideallysuitedtoaddressfundinggapsespeciallywithintheSMEsectorandthus,playacriticalroleinmeetingdevelopmentaspirationsinemergingeconomies.BothIndiaandChinaaredefinitivecasesinpointwhichsawprivateequitycomplementtheirimpressivegrowthpathwitnessedintherecentyears.Thisstoodasourrationaleandinspiredustotakeonprivateequityinvestmentmanagementasourlatestventurewhichwebelievehastruepotentialtosupportourcountry’sdevelopmentambitions.

Aswillbediscussedatlengthintheensuingsection,inthereportingyear,wecementedourcommitmenttotakeforwardourprivateequityventurewhichwasinitiatedintheprecedingyear.

Accordingly,anewjointventurewasestablishedinMauritiusinpartnershipwithaU.S.basedprivateequityfundmanagerwhilstthelandmarkfunddedicatedforprivateequitywaslaunchedinSriLanka.ThefirstclosingoftheFundamountedtoUSD42.5Mn.NCAP’sinvestmentcommitmentwas USD12Mn,withthemajorityofthebalancecontributedbykeyinternationaldevelopmentfinanceinstitutions.Ourinvestmentwillbecalledoverinthenextfiveyears.


GRI - G4/ G4 - 13


PROPRIETARY TRADINGPromptedbythebullishtrendsthatprevailedontheCSE,ourproprietarytradingactivitiesgatheredmomentuminthereportingyear.Weleveragedonourstrengthsinresearchinformationandbest-in-classsupportsystemstobetimelyandstrategicintradingactivitiesandmaintainedabalancedportfoliotominimisetheriskexposure.Weexercisedduecautioninassetallocationandthus,soughttomitigateriskstoanacceptablelevelwithinthegroup.

Ourequityportfolioencompassingbanks,financeandinsurance,foodandbeverage,chemicalandpharmaceuticals,constructionandengineering,diversifiedholdings,healthcare,hotelsandtravels,landandproperty,manufacturing,motor,powerandenergyandtelecommunicationssectorsperformedwellwithstablereturnsofaround35%,wellexceedingthemarketperformance.

WealsoreportedattractivecapitalgainsinthefixedincomeportfolioamountingtoRs.79Mn.

STRUCTURED EqUITY INvESTMENTSRefer Subsidiary Review. Page : 42

Inthereportingyear,NCAPsoughttostrengthenitsstructuredequityinvestmentportfolio.Thefocuswasontheenergysector-akeydriverwithstrongpotentialtospureconomicvalue.InDecember2014,inkeepingwiththisandcomplementingouraspirationstowardsgreaterinvolvementingreenenergyinvestments,NCAPmadeasignificantequityinvestmentofRs.730Mnintheacquisitiondealofahydro-powerenergycompany-ResusEnergyPLC,formerlyknownasHemasPowerPLC.PartneringwithACLCablesPLCandTrydanPartners(Pvt)Ltd,aspecialpurposevehiclebackedbythemanagementteamofResusEnergyPLCacquiredastakeof75%ofthecompanyownership.ThisinvestmentisexpectedtoyieldattractivereturnsinthemediumtermespeciallygiventheplannedcapitalrestructuringofResusEnergyPLCandimplementationofnewpowerprojectsthatareinthepipeline.Theacquisitionwasstructuredbyourinvestmentbankingarm,NDBIB.

AwARDS AND RECOGNITIONSRefer Subsidiary Review Pages : 45 & 52

Showcasingourexpertiseandtheprogressivestepstakentofirmourleadershippositioningwithintheinvestmentbankingterraininthecountry,NCAPGroupwashonouredintheyeartobeinternationallyacclaimedwithsomeofthemostesteemedawards.Wereceivedatotalof21globalawards.

NDBIB CRISIL SRI LANKAN INDICES (CRISIL RESEARCH)WecontinuedtopublishNDBIB-CRISILindicesontreasurysecurities,daily,onprintmediaandonourofficialwebsite.Thefourindicesmonitoredthetrendsof91and364daytreasurybillsandthreeandfiveyeartreasurybondswhichineffectsought to facilitate stakeholders to make informed investment decisions.TheseindicesarepublishedincollaborationwithCRISILLimited,India,aglobalanalyticalcompany.



FUTURE OUTLOOK

GLOBAL OUTLOOKNotwithstandingthenuanceofambiguityintherecovery,theglobaleconomyisexpectedtobemorerobustintheyear2015.Withintheadvancednations,Americaisexpectedtobebuoyant,leadingtheglobalgrowthwhilsttheEuronationsandJapan,though‘outofthewoods’wouldstillbetroubledbylowinflationandinertiaineconomicactivity.Growthprospectswithinemerginganddevelopingeconomiesareprojectedtoberesilienttoendurestabilityinitsgrowthmomentum,yetataweakerpace.

Theloweroilpricesareexpectedtoliftglobalgrowth,eventhoughuncertaintyremainsonitscontinuanceandbringinginexternalweaknessesinoilexportingnations.Volatilityinglobalfinancialmarketswillcontinuetobeacauseofconcern,particularlyfortheemerginganddevelopingnations.ThegeopoliticalsituationparticularlyincitedbythecrisisinUkraineandtheriseoftheIslamicStateinpartsofIraqandSyriaandthepersistingtensionwithintheMiddleEastwillnodoubtimpactthemarketperformance,althoughlukewarminitsmanifestation.

SRI LANKA’S ECONOMIC OUTLOOKComplementedbytheup-sidetrendsintheglobaleconomy,albeit,stillinconsistent,SriLankaiswellpoisedtopace-uptowardsitsdevelopmentgoalswithinthepostconflictsettings.Although,intheshort-term,socio-politicaluncertaintiesremainareality,thecountryhasinplaceanecessarypolicybackdropandtheaspirationstoenhanceconsumerandinvestorconfidenceinthemediumterm.Themonetarypolicy,verylikelytocontinueonanaccommodativestanceintheimmediateyearaheadwillspurgreatermovementinprivatesectorcreditwhilstsupportingthecapitalmarkettotakeupamorepivotalrolewhichwillboosteconomicactivities.Thistogetherwithbroadlyencouragingmacroindicatorswillsupportthepathfortheeconomytogrowasanticipatedtoanupper-midincomestatus.

NCAP PLANSWithinamorestablemediumterm,NCAP’sroleasfullserviceinvestmentbankinggroupwillbemoreprominentandsignificant.Backedbyadiversifiedproductoffering,proficientteam,highlyesteemedbrand,parentandstrongstrategicalliancesincludingtieswithmulti-lateralagencieswillenableNCAPanditsnetwork

ofsubsidiariestoavailtheopportunitiespresentintheemergingeconomy.Ouraimistobuildastrongerfundbaseandextendafullproductrangesupportedbyourexpertisewhichisunprecedentedinthemarket.Ouridealsingovernance,ethics,riskmanagementandsocialresponsibilitywillfirmourpresenceleadinguptolongtermsustainability.

KeyPlansfor2015andtargetsaresetoutbelow:

Continuoustraininganddevelopmentof theteamincludingsuccessionplanning

Furtherdevelopandaddvaluetothe NCAPscholarshipprogramme

Completetheharmonisationofcompliancesystems/structuresforthegroup

Investinprivateequitytransactions

DevelopacomprehensiveriskmanagementandmonitoringframeworkwithcloserworkingtieswithNDBRiskDepartment

Implementationofasuccessionplan

Introducenewandinnovativeproducts across the cluster

Implementationofaperformancebased incentiveschemeincludinganESOP

Encouragecross-sellingacrosstheclusterandNDBGroup

Activelylookforacquisitionopportunities inthefinancialservicessector

Commencedebttradingbothgovernment andcorporate

DevelopstrategicalliancesinSouthEast Asia,India,MiddleEast,EuropeandUSA

key aCtioN 2015

Consolidated Targets 2015▪ Assetsunder

management:>Rs.127Bn

▪ Returnon Equity>15%

▪ ProfitsAfterTax:Rs.1,026Mn


NDB INvESTMENT BANK (NDBIB)

MANAGEMENT DISCUSSION AND ANALYSIS / SUBSIDIARY REvIEw

iNitial puBliC offeriNgs (ipo)Advise,structureandmanageIPOswithplacementsanddistribution.

NDBiBproDuCt aND serviCe offeriNg

seCoNDary equity raisiNgProvideadvisoryservicesandsolutionsforsecondarypublicofferings,rightsissues,privateplacementsandissuanceoflongtermcapitalinstruments.

mergers aND aCquisitioNsProvideadvisoryservicestoinitiate/facilitateMergersandAcquisitionsaswellasarrangingacquisitionfinancing.

seCuritisatioNFacilitatingbusinessestogrowbyraisingcapitalthroughthestrengthoftheirfuturecashflows.

CommerCial papersAddressworkingcapitalfinancialrequirementswithmaturitiesuptotwelvemonths.

DeBeNturesManageend-to-endprocessesofdebentureissuesalongwithadvisoryservicesoncreditrating.

loaN syNDiCatioNsStructureandadviseonprojectviabilityandarrangefinancingviasyndicateoflocalandforeignfundinginstitutions.

Corporate aDvisoryRestructuringofentitiestooptimisethevalue.


key performaNCe iNDiCators 2014 2013 groWtH

FundsRaised(Rs.Bn) 24.5 42.2 (42%)

ProfitAfterTax(Rs.Mn) 60.3 179.1 (66%)

OperatingProfitMargin 35.9% 62.3% -

NetProfitMargin 35.4% 48.9% -

ROE 11.6% 42.7% -

MANAGEMENT DISCUSSION AND ANALYSIS / SUBSIDIARY REvIEw (Contd.)

DeBeNturesStructuredandmanagedfourlisteddebentureissuestothevalueofRs.7.5Bn.

NDBiB operatioNal HigHligHts - 2014

term loaNArrangedasyndicatedtermloanofUSD50MnforadualfuelplantprojectinpartnershipwithNDBCapitalBangladesh.

iposSuccessfullyplacedandmanagedtheyear’ssecondlargestIPOontheCSE-AlumexPLCraisingRs.838Mn.

islamiC fiNaNCeVenturedintoIslamicfinance,structuringa‘Wakala’facilityforacompanyinthePowerandEnergySector.

Corporate aDvisory aND mergers aND aCquisitioNsFacilitatedtheacquisitionofaPowerandEnergycompanythroughaconsortiumofinvestors.Advisedonacapitalrestructuringplantoenhancethevalueoftheinvestment.


OvERvIEwNDBInvestmentBankLtd(NDBIB),aformerjointventureestablishedin1996betweenNDBandCitibankN.A,isafullyownedsubsidiaryofNCAPandisthefront-runneroftheGroup.Engagedonafee-basedinvestmentbankingmodel,offeringanarrayofdebtandequityproductsalongwithcorporateadvisoryandmergersandacquisitions,NDBIBhasestablishedasolidpresenceasthemarketleaderforalmostoveradecadewithintheinvestmentbankingdomaininthecountry.Recognisedandacclaimedbysomeoftheesteemedinternationalawardingbodies,NDBIBhassuccessfullystructuredandplacedinnovative,complexandperceptivedealsincludinginitialpublicofferings(IPOs),RightsandPreferenceShareIssues,Debentures,SecuritisationsandDerivativesforleadingbusinesses.

BUSINESS PERFORMANCEUpholdingitsdominanceandfurtherreinforcingitspresenceasadiscerninginvestmentbank,NDBIBcontinuedtodelivercomplexandintensedealsintheyearwhichincludedIPOs,Debentures,SecuritisationsandAdvisoryServicesparticularlyforAcquisitions,tailoredtomeetthediverseinvestorrequirementswithinadynamiclandscape.

Notwithstandingamoresubduedbusinessenvironment,particularlyfollowingthelacklustreconditionswithinthedebtmarketrelativetothedrivewitnessedintherecentpast,NDBIBwasabletomaintainarobustperformanceintheyear,althoughmodestcomparedto2013performance.Thetotalfundsgenerated,recordedadeclineof41.9%toRs.24.5BnwhilstthefeebasedactivityrevenueofRs.102.5Mncorrespondedtoa68.6%decline.Revenuefromdebenturetransactionsof Rs.44.8Mnaccountedforthelargestshareofthetotal,downfrom64.9%sharerecordedintheprecedingyear.Otherfeebasedactivities-securitisations,loansanddebtinstruments,equitydeals,advisoryservicesonacquisitions,feasibilitystudiesandsyndicationsabsorbedthebalance56.3%ofthetotal,recordingRs.57.7Mn.

DEBENTURESMovingawayfromtheupsidetrendthatprevailedintherecenttimesafterthebudgetarytaxconcessionsforlisteddebenturesatthehandsoftheinvestors,thelisteddebtmarketremainedrelativelysubduedintheyearunderreview.Theexcessliquiditycombinedwithaccesstolowcostshort-termfundsandtheuncertaintiesonlowinterestrateregimedidnotportendwellonthedebenturemarketperformance.

Despitethedebtmarketdynamics,NDBIBmaintainedasteadypresencewithitsengagementwithinthecorporatedebenturemarketinthereportingyear;withfundsgeneratedthusfargoinguptoRs.37Bnsincebudgetaryconcessionscameintoeffect.NDBIBstructuredandmanageddebentureissuesforfourleadingcorporates-threeasfirsttimeissuesforHemasHoldingsPLC,RichardPeirisandCompanyPLC,SiyapathaFinanceLtdandanotherforLionBrewery(Ceylon)Ltdasarepeatclient.Allfourissueswhichwereoversubscribedwithinhoursafteropeningforsubscriptiongeneratedfunds

fuNDS raISeD (rS. BN)

05

101520253035

4540

Rs.Bn

2010 2011 2012 2013 2014

Debentures and Securatisations 63%

Other Debt Instruments 19%

Equity Placements

and Other Advisory 18%reveNue coNtrIButIoN 2014


ofRs.7,500Mn,accountingfornearly30.6%ofthetotalfundsraisedbyNDBIBandreflectingnearlya12.4%shareofthetotalmarket.

LOAN STRUCTURINGInitspioneeringspirit,NDBIBinthereportingyearcollaboratedwithNDBCapitalBangladesh,asubsidiaryoftheNDBGroup,tostructure,adviseandmanageacross-borderloansyndicationforaleadingcompanyinthepowerandenergysectorin SriLanka.ThesyndicatedloanofapproximatelyUSD50Mn,bringingtogetherfinancialinstitutionsfrombothSriLankaandBangladeshwasutilisedtosetupadualfuelplantinBangladeshwithacapacityof52megawatts.Thisisthesecondpowerplantundertakenbythesponsorandthefinancingforthefirsttoo,wasarrangedbyNDBIB.

NDBIBalsofacilitatedandraisedUSD2.2MnandRs.1.1BnaslongtermloansforleadingcorporatesinSriLanka.

SECURITISATIONSReinforcingitsexpertiseinstructuredfinanceproducts,NDBIBcontinuedintheyeartoflexitsdominancewithinthesecuritisationmarket.Foursuccessfulsecuritisationdealswerearrangedforleadingcompanieswithintheplantationandleasingandfinancesectors,generatingRs.1.65Bnworthoffunds.Thisaccountedfor6.7%ofthetotalfundsraisedfortheyearascomparedto10.1%intheprecedingyear.

ISLAMIC BANKINGWellalignedtotheNCAPGroup’stenetofupholdingfinancialinclusivity,NDBIBventuredintoIslamicbanking-successfullystructuringandplacinga‘Wakala’facilityforacompanywithinthepowerandenergysector.Thisfacilitywhichisanequivalenttoaconventionalcommercialpaper,wasendorsedbytheShari’ahSupervisoryBoardascomplianttothestipulatedShari’ahprinciplesinIslamicfinance.

IPosEvenwithinreboundingcapitalmarketconditionsthatprevailedintheyear,thedemandforfreshequitythroughIPOsontheCSEremainedsubduedanddidnotgathermomentumasanticipated.NDBIBinitsroleasoneoftheforemostfinancial

advisorsandmanagers,succeededtoclinchoneofthefewandmostsuccessfulIPOsofferedforsubscriptionduringtheyear;IPOofAlumexPLCforthevalueofRs.838Mn.ThisIPOwhichwasthesecondlargestinthemarketwasoversubscribedontheopeningdayandcontinuesasatdatetotradeaboveitsIPOpricing.

MERGERS AND ACqUISITIONSDrawingonthesynergieswithitssistercompany,NDBS,NDBIBstructuredandmanagedtheacquisitionof75%stakeheldbyHemasHoldingsPLCofResusEnergyPLC,formerlyknownasHemasPowerPLC.NDBIBactedastheadvisortothemanagementofResusEnergyPLCandsupportedwiththevaluationandarrangedaconsortiumofinvestorsincludingequitycontributionfromACLCablesPLC,TrydanPartners(Pvt)LtdandNCAP,raisingfundsofnearlyRs.1.7Bn.Debtfinancingwasalsoarrangedforsomeoftheequitypartners.NDBIBwasalsomandatedtomanagethemandatoryofferfollowingtheacquisitionaspertheSECguidelines.

FINANCIAL SECTOR CONSOLIDATIONSupportingtheCentralBank’sfinancialsectorconsolidationplans,NDBIBplayedasignificantroleinstructuringandadvisingonmergersandacquisitionsontheCSE,mandatoryoffersandrightsissueswithinthesector.Intheyear,NDBIBadvisedandmanagedthemandatoryofferfollowingtheacquisitionof70%stakeofGeorgeSteuartFinancePLCbyDeshodayaDevelopmentFinanceCompanyLtd.ThemandatewasalsosecuredtoactasthefinancialadvisortotheproposedamalgamationofthetwocompaniesandthesubsequentlistingofthemergedentityontheCSE.

NDBIBfurthermoresupportedinitsadvisorycapacityandmanagedtherightsissueofSanasaDevelopmentBankPLC,generatingoverRs.1Bn.

MARKETINGInthereportingyear,NDBIBwentinforprintmediapromotions,disseminatinginformationonitstotalserviceofferunderthebrandstrengthandreputeofNDB.



RECOGNITIONS AND AwARDSTheawardsreceivedintheyearunderreviewfromsomeofthegloballyacclaimedfinancialandinvestmentmagazinesstandasatestimonytothewayinwhichNDBIBiscommittedtoupholdthebestpracticesininvestmentbanking,reachingforinnovationandoperationalexcellence.

NDBIBwasrecognisedasthe“BestInvestmentBankin SriLanka”bytheesteemedEuromoneyMagazineforthethirdsuccessiveyearatthe‘AwardsforExcellence2014’andbytheUKbasedInternationalFinanceMagazineforthesecondsuccessiveyearatthe‘IFMAwards’alongwiththeUKbasedWorldFinanceMagazine.

NDBIBthisyearaswellwentontoclinchfourawardsfromGlobalBankingandFinanceReviewviz.‘BestInvestmentBank’,‘BestInvestmentBankingServices’,‘MostInnovativeInvestmentBank’and‘BestAssetBackedSecuritisation’.

GlobalBrandsMagazineAwardshonouredNDBIBforitsbrandstrengthasthe“TrustedInvestmentBankingBrandSriLanka2014”whilsttheteamatNDBIBwasrecognisedasthe“BestDebtCapitalMarketsTeam”inthecountrybyCapitalFinanceInternational.

Euromoney Award for the 3rd time in 2014



maNageD tHe HigHest NumBer of DeBeNture issues iN a siNgle year oN tHe Cse

NDBiB milestoNes

maNageD tHree of tHe four largest ipos oN tHe Cse to Date

maNageD top tHree ipos oN tHe Cse iN terms of oversuBsCriptioN levels

largest Corporate DeBeNture issue oN tHe Cse

largest prefereNCe sHare issue

largest quaNtum of fuNDs suBsCriBeD iN a listeD Corporate DeBeNture

largest utility BaseD seCuritisatioN

largest CreDit aND DeBit CarD seCuritisatioN

largest tea reCeivaBle seCuritisatioN

10debentureissuesraisingRs.29.3Bn

NationalDevelopmentBankPLC:Rs.10Bn

DialogAxiataPLC:Rs.5Bn

NationalDevelopmentBankPLC:Rs.21.3Bn

CeylonElectricityBoard:Rs.1.43Bn

CargillsCeylonPLC:Rs.2Bn

KotagalaPlantationPLC:Rs.500Mn

DialogAxiataPLC:Rs.8.5Bn(largesttodate)People’sLeasing&FinancePLC:Rs.7BnLankaIOCPLC:Rs.4Bn

UnionBankPLC:Rs.129BnDialogAxiataPLC:Rs.55.9BnSingerFinance(Lanka)PLC:Rs.54.3Bn


RECOGNITIONS AND AwARDS

‘BestInvestmentBankin SriLanka’Recognisedforthe3rd consecutiveyearatAwardsforExcellence2014byEuromoneyMagazine

‘BestInvestmentBankin SriLanka2014’Recognisedfor the 2ndconsecutiveyearatIFMAwardsbyInternationalFinanceMagazine

‘MostInnovativeInvestmentBankinSriLanka2014’RecognisedbyGlobalBankingandFinanceReview

‘BestInvestmentBankin SriLanka2014’RecognisedbyGlobalBankingandFinanceReview

‘TrustedInvestmentBankingBrandSriLanka2014’,RecognisedbyGlobalBrandsMagazineAwards

‘BestInvestmentBankingServicesinSriLanka2014’ RecognisedbyGlobalBankingandFinanceReview

‘BestDebtCapitalMarketsTeamSriLanka2014’RecognisedbyCapitalFinanceInternational

‘BestAsset-BackedSecuritisationinSriLankain2014’byGlobalBankingandFinanceReview

‘BestInvestmentBankin SriLanka2014’Recognisedforthe 2nd consecutiveyearbyWorldFinanceMagazine


FUTURE OUTLOOKWithinthebackdropofaburgeoningeconomy,thefinancialmarketofthecountryisexpectedtodrivetowardshigherground,withinvestorconfidenceleadingtogreaterlevelsofactivity.NDBIBastheversatileinvestmentbankingarmoftheNCAPGroupisfullygearedtorespondtotheopportunitiesofanemergingeconomytogetherwiththechangesthatarerapidlytakingplacewithintheregulatoryframework.NDBIBintendstomusteritsfullpotentialtoextendaproactiveservice,supportingtheneedsofinvestors-advisingonandmanagingraisingfundsonbothequityanddebtmarketsthroughIPOs,corporatedebenturesandloaninstrumentswhilstseekingtopursuefurtheropportunitiesinstructuringandmanagingmergersandacquisitions.

Towardsthis,NDBIBwillbefocusedinitseffortstodrawgreatersynergieswithitssisternetworkandworkcloselywithNDBCapitalBangladeshandwithNCAP’sstrategicpartner,DBSBank,Singapore,seekingformutuallyviableopeningsandtofirmthedistributionchannel.Cross-borderopportunitieswillalsobesoughtintheMiddleEastandIndia.

Inthenear-term,NDBIBhasmandatesathandforinnovativesolutionsandhasapromisingpipelineforbothdebtandequitydeals.



NDB wEALTH MANAGEMENT (NDBwM)

NDBWm proDuCt aND serviCe offeriNgs

private WealtH maNagemeNtExtendarelationshipbasedservicetostructureandmanagediversifiedinvestmentportfolioscombinedwithprivilegebankingservicesthroughtheultimateparent,NDBforhigh-net-worthindividuals.

mutual fuNDs Adviseandcreateindividualisedplanstomeetdiversesavingsandinvestmentneedswithselectionofsixriskratedfundsespeciallytargetingtheretailsector.

DisCretioNary portfolio maNagemeNt Providesadvisoryandconsultancyservices,structureandmanageportfolioofinvestmentsincludingexecutionoftrades,andportfolioadministrationincludingmaintainingclientrecords,preperationofreports.

mutual fuNDs - risk rateD fuNDs

groWtH fuNDOpenendedunittrustswithinvestmentsexclusivelyinlistedsharesforinvestorswithhighrisk-returnprofilesandlongerinvestmenthorizons.

groWtH aND iNCome fuNDInvestmentsinbothequityandfixedincomesecuritiesinresponsetomarketconditionstargetinginvestorswithhightomediumriskprofiles.

gilt eDgeD fuNDSriLanka’sAAAratedfund,investmentsareexclusivelyingovernmentsecuritiesforinvestorsrequiringverylowdefaultrisk.

moNey plus fuNDInvestmentsinshort-termcorporatesecuritiesforinvestorswithalowriskprofileandvaluelowvolatilityofcapitalandhighlevelofliquidity.Flexibilityisgiventowithdrawmoneyattheinvestors’discretion.

moNey fuNDInvestmentsinshort-termgovernmentsecuritiesforinvestorswithaverylowriskprofileandvaluelowvolatilityofcapitalandhighlevelofliquidity.Flexibilityisgiventowithdrawmoneyattheinvestors’discretion.

iNCome fuNDInvestmentsexclusivelyonfixedincomesecurities-corporatedebtinstrumentsforinvestorswithmediumtolowriskprofiles.Flexibilityisgiventodepositandwithdrawattheinvestors’discretion.


Key Performance Indicators 2014 2013 Growth (%)

AssetsUnderManagement(Rs.Bn) 86.8 65.0 34%

AssetsUnderManagement-UnitTrusts(Rs.Bn) 32.1 14.8 117%

ProfitAfterTax(Rs.Mn) 172 86.6 98%

ReturnonEquity(%) 39% 27% 44%


Maintainedmarketleadershipwithinthewealthmanagementindustry.

NDBWmoperatioNal HigHligHts 2014

FundsundermanagementofRs.86.8Bn,makingNDBWMthelargestprivatesectorfundmanager.

Discretionaryportfoliogrewby9%toRs.54Bn.

MutualFundsgrewby117%toRs.32Bn.

Themarketshareofmutualfundsreached26%.

MutualfundtotalgrosscollectionsofRs.31Bn.


OvERvIEwAtthehelm,asSriLanka’slargestprivatesectorwealthmanagementcompany,NDBWMhasestablishedasolidpresencewithinthecapitalandmoneymarketsspanningovertwodecades.LicensedandregulatedbytheSECofSriLanka,NDBWMoffersdiversesolutionsinwealthplanningandassetmanagement-engaginginstitutions,high-net-worthindividualsandsteadilyprogressingintotheretailmarket.Internationallyacclaimedforitsroleinthecountry’swealth/assetmanagementindustry,NDBWMisadeptandbackedbystandardsforexcellenceinservice,bestinclasssystemsandtalentedteamtoaddresstheneedsofaclienteleofover3,000withfundsundermanagementclosinguponRs.90Bn.Furter,NDBWMisamemberoftheUnitTrustAssociationof SriLanka.

INvESTMENT COMMITTEETheinvestmentcommitteeofNDBWMcomprisesoffivememberswithMr.VajiraKulatilakaspearheadingastheChairman.ThepurposeoftheInvestmentCommitteeistounderstandthebroadobjectivesofdifferentfundsmanagedbyNDBWMaspertheinvestmentpolicystatementsandtocontributeexpertiseandfeedbacktosupportthedecision-makingprocessandinvestmentactionstakenbythefundmanagers.Thecommitteemeetsonaquarterlybasisandmayadviceandrecommendonassetallocationstrategiesbasedonmarketeventsandthesurroundingexpectationsoftheeconomicandgeopoliticalenvironment.Furthermore,theinvestmentcommitteewillreviewtheperformance(riskandreturn)ofthefundsmanagedbytheCompany.

GRI - G4/ G4 - 16



BUSINESS PERFORMANCEConsolidatingitspositioningintheyearasthemarketleaderinthewealthmanagementindustry,NDBWMmadeheadwayinbringingawell-roundedproductoffertotheSriLankanMarket.Respondingwithastutenesstotheprevailingtrendswithinthecapitalandmoneymarkets,theassetsundermanagementsustaineditsgrowthmomentumwitnessedoverhalfadecade,growingintheyearbyanimpressive34%vis-à-visthe

precedingyeartoRs.86.8Bn.Unittrustcomprisingsixriskratedfunds,postedasoundperformancewithanincreaseofassetsby117%toreachRs.32Bn.

Theprofitsintheyearregisteredanincreaseof99%to Rs.172Mnwithreturnonequityatanoutstanding39%comparedto27%inthepreviousyear.

tHe fuND maNagemeNt proCess

RESEARCH

Research

InvestmentCommittee

ApprovedInvestments

PortfolioManager

InvestmentControl Broker

Trading CustodianBank

InvestmentAdministration

RepresentativeDebt/EquityPortfolio

FUND MANAGEMENT

CONTROL

TRADING

ADMINISTRATION


DISCRETIONARY PORTFOLIOThediscretionaryportfoliomanagementengaginglargeinstitutionscoveringthoseofinsurancecompanies,privatesectorprovidentfunds,endowmentfunds,corporatesandconglomerates,postedstrongresultsintheyearunderreview.Accountingforover63%oftotalassetsundermanagement,thisportfoliointhereportingyearincreasedtoRs.54Bn,growingby9%overtheprecedingyear.

PRIvATE wEALTH MANAGEMENTNDBWMsoughtintheyeartofurtherbracetheprivatewealthmanagementportfolio,supportinghigh-net-worthindividualswithclient-focusedsolutions,tailoredtomeettheirdiscerningneeds,particularly,tappingtheirriskappetiteforhigherreturns.Thecollaborationswithsistercompaniesandtheultimateparent,NDB,trulybackedNDBWMtobefirminitsrelationshipbasedmanagement,underpinningtheremarkableprogressmadeonthisportfolio.

MUTUAL FUNDSMovingfurthertoaccesstherapidlygrowingretailsector,mutualfundsintheyearsawgreaterlevelofactivity,withflexibleanddiversewealthplanstomeetlifeeventsof

investors.Mutualfundsprogressedsteadily,continuingtoreinforceNDBWM’spositioningasakeycontributortothegrowthoftheindustry.Withthreenewaccountsopenedperday,onaverage,mutualfundsofNDBWMregisteredRs.31Bningrossfundcollectionsin2014,takingthetotalunittrustfundsundermanagementtoRs.32Bn,reflectingagrowthofover100%asagainsttheprecedingyear.Fundsundermanagementcorrespondedtoamarketshareofover26%ofanindustryestimatedtobeRs.127Bn.

MARKETINGNDBWMintheyearsoughttostrengthenitsmarketingarm,buildingontheteamwithfocusedtraininginitiatives-customerservice,productandappraisalswhilstrelyingoncost-effectivebelow-the-linemarketingtoolstopromotecomprehensivewealthmanagementplans;particularly,ontheunittrustoptions,tappingintothepotentialoftheretailsector.Intheyear,NDBWMparticipatedin10roadshowsjointlyorganisedbythegroupcompaniesincludingseveninColomboandthreeintheperipherytogetherwithotherinitiativessuchaspresentationstoselectedtargetgroupsandemailcampaignssupportedtocreateawarenessontheproductofferandbuildastrongercustomerbase.

SYSTEMS AND PROCESSESReinforcingclientservicingcapabilities,NDBWMextendedbest-in-classsystemstosupportandmanageitsclienton-boardingandCustomerRelationshipManagement(CRM)systems.TheclientsupportwasfurtheraugmentedbyintroducinganSMSalertsystemstoprovideinformationonclienttransactions,afirstinthewealthmanagementindustryinSriLanka.Intheensuingyear,NDBWMintendstointroduceanindependentonlineclientservicingandreportingportaltoenhanceclientserviceandconvenience.

uNIt truStS aND aSSetS uNDer maNaGemeNt - 2010-2014

1,000

21,000

41,000

61,000

81,000

101,000

Rs.Mn

2010 2011 2012 20142013

Unit Trust Assets Under Management


RECOGNITIONS AND AwARDSRecognisedintheyearforupholdingstandardsandreachingfortheheightswithinthewealthandassetmanagementindustry,NDBWMreceivedtwoprestigiousinternationalawards;‘BestInvestmentManager’fromWorldFinanceMagazineand‘TheBestAssetManagementCompany’fromtheGlobalBankingandFinanceReview.


FUTURE OUTLOOKWithSriLankawellsettoreachouttoitsaspiredgrowthobjectiveswithhigherpercapitaincomeinthemediumterm,wealthmanagementoptionswillbesoughtafterbyinstitutionsanddiscerningindividuals.Thedemandformutualfundsisexpectedtobestronger,ifawarenessisaddressedrightlyontheproductandthegainsthatcanbereapedinthelong-termandasanalternativetoconventionaldepositproducts.Thepolicydirectivesandregulatorymandatesareinplacetoseegreatermovementintheindustry.

Withastrongbrand,expertiseandconvergingofsynergieswithintheNDBGroup’sretailandinvestmentbankingservices,NDBWMiswellpositionedtoleadthewealthmanagementindustryinSriLanka.

‘BestInvestmentManagementCompanyin2014inSriLankabyWorldFinanceInvestmentManagementAwards’

‘BestAssetManagementCompanyinSriLankain2014bytheGlobalBankingandFinanceReview’


NDB SECURITIES (NDBS)

NDBs proDuCt aND serviCes offeriNgs

listeD equityFacilitatesandprovidesadvisoryservicesforequitytradingontheCSE.State-of-the-artonlinetradingplatforminplaceforspeedyandconvenienttradingactivities.

listeD DeBtFacilitatesandprovidesadvisoryservicesfortradinginlisteddebenturesontheCSE.

equity researCHQualityequityresearchcoveringmacroeconomictrends,industryandcompanylevelresearch.Marketupdatesreleasedonadailyandweeklybasisinallthreelanguagesasrequired.

margiN traDiNgExtendsaplatformtoengageinmargintrading,withcreditfacilitiesbeingarrangedthroughtheultimateparentcompany,NDB.


key performaNCe iNDiCators 2014 2013 groWtH

CustomerBase 51,822 48,991 5.8%

NumberofAccountsOpened 2,831 2,201 29%

Turnover(Rs.Mn) 167 108 55%

ProfitAfterTax(Rs.Mn) 26 7 271%

ReturnonEquity 8.4% 2.4% 258%

OvERvIEwEstablishedin1992,NDBSecurities(Pvt)Ltd(NDBS)thesecuritiestradingarmofNCAPGroup,isoneofthepioneeringstockbrokingcompaniesinthecountry.Standingapartfromthecompetition,NDBSiswellpositionedandrecognisedasaprincipleplayerontheCSE,facilitatinginvestmentandtradingservicestoinstitutionsandindividuals(bothlocalandforeign).NDBSoffersaconvenient

andefficientplatformfortransactionsoflistedequityanddebtsecuritiesalongwithothervalue-addedservicesincludingonlinefacilities,margintradingandconductingin-depthresearch.NDBSislicensedandregulatedbytheSECofSriLankaandamemberoftheColomboStockBrokersAssociation.


NDBShasanactiveinstitutionalandhigh-net-worthclientbase(bothlocalandforeign)andismakingsteadyprogressinbracingtheretailportfoliowithfocusedstrategies.

NDBsoperatioNal HigHligHts - 2014

Securedamarketshareof4%withintheequitymarket.

Increasedfocusontradingcorporatedebt.

InitiatedanSMSportal,facilitatinginstantupdatesonaccounttransactions.Thisenabledconvenienceandspeedtowardsbetterclientservicing.

Theofficialwebsitewasrevampedandredesigned,withupdatedfeaturestobringgreatersophisticationtoonlinetradingactivities.

GRI - G4/ G4 - 16


BUSINESS PERFORMANCEDuringtheyear2014,renewedactivitywasseenontheCSE,withtheindicesperformingstronglyandturnoverincreasingsignificantly.Theprevailingmonetarypolicysustaininganaccommodativestance,leduptothecountry’salltimelowestinterestratesboostingthestockmarketperformance.NDBSfocusedondifferentiatingitsoperationsinaconcentratedmarketbyseekingtoleverageonitsstrengths;namelybrandandgroupsynergies,aversatileproductcustomisedtocatertodifferentrisk-returnprofilesofinvestorsandmoreimportantlythecorporateethosthatemulatesethicalpracticesincapitalmarkets.

Inthereportingyear,giventheuptrendontheCSE,NDBSpostedrobustresultssecuringamarketshareof4%withintheequitymarket.Focusingoninstitutionalclients(particularlyforeigninvestors)whoweremarkedlyupbeatontheCSEduringtheyear,NDBSsoughttobraceitsproductoffertoberesponsivetotheirperceptivedemands.Thehigh-net-worthclientelewasbuttressedwithpersonalisedservicesandanallinclusiveproduct.NDBSteamedupitsequitytradingwithretailbankingproductsandwealthmanagementproductsincollaborationwithourultimateparentNDBandsistercompanyNDBWMrespectively.Theretailportfoliosawanimprovementwithgreaterinterestandenhancedlevelofactivitycomparedtothemodestperformanceseeninthepreviousyear.Thepresencewithinthefixedincomemarketwasalsosustainedwhilstengaginginfeebasedservicesinvaluationoflistedcompaniesandadvisoryservicesformergersandacquisitions.NDBSteamedupwithitssistercompaniesNDBWMandNDBIBasadistributionchannelaswellascross-sellingunittrustproductsandcollaboratingwiththeirinvestmentandacquisitiondealsrespectively.

Theclientbasein2014increasedby2,831newaccounts.Thisrepresenteda5.8%increaseintheclientbaseoverthepreviousyear,leadingtohigherturnoverandbetterreturns.

OUTREACH AND MARKETINGFortifyingitsretailbase,thedistributionchannelcomprisesofbranchesinninestrategiclocations.NDB’sbranchnetworkwhichisbothcost-effectiveandextensive,pavedthewayfor

NBDStotapintothepotentialofunexploredmarketswithintheperiphery.NDBSinthereportingyearlookedatconsolidatingitsbranchestostreamlinetheoperationsandbringincostefficiencies.Aduediligenceisinprocesstoascertainbranchperformanceandprofitability.

Strengtheningtheretailoperationsanddrivingmarketinclusivity,NDBSengagedthepublic(inclusiveofschoolchildren)onmarketawarenessprogrammesthatsoughttodisseminateinformationonequityanddebtmarketinvestmentopportunitiesasanalternativetoconventionalbankingtools.Inthisspirit,fourroadshowswereorganisedjointlywiththegroupinkeylocations.

RESEARCHTheresearcharmremainedafocalpointtoNDBS’soperations,supportinginvestmentdecisionsandadvisoryservices.Withastrongerteam,thisyearresearchactivitiesremainedfocusedandresourceful,coveringbroadareasinmacroeconomictrendswithinthecountry,overallindustryandcompanyspecificupdates.Theresearchteamprovidedvaluationsofstocksusingbothfundamentalandtechnicalanalysis.

Theresearchpublicationsarereleasedinallthreenationallanguages,dailyaswellasonaperiodicbasis,settingabenchmarktotheindustry.Thisenablesclientsandthepublictomakeinformedandeffectivedecisionsontheirinvestments.Onceagain,NDBSwasacclaimedbyBloombergBusinessforthethirdconsecutiveyearforqualityresearchandrecommendations.

SYSTEMS AND PROCESSESEnhancingclientservicing,NDBSintheyearsoughttoupdatetheITsystemandrelatedprocesses.Initiatedlastyear,theofficialwebsitewasrevampedandredesigned.Furthermore,harmonisingitwithcorporatebrandvaluesbroughtinanew‘lookandfeel’tothewebsite.Theonlinetradingplatformwithnewinteractiveanduserfriendlyfeatures(automateddocumentfillingandeasyaccesstoresearchmaterial)enableduserconvenienceandspeedynavigationandtransactions.TheSMSportalwithinstantupdatesonaccountmovementwasthefirstamongststockbrokingfirmswhichaddedontothecompetitiveedgeofNDBS.


FUTURE OUTLOOKAsaresultoftheeconomydrivingonasteadypathtowardsitsgrowthtargetscomplementedbyarelativelypositivemacroeconomiclandscape,thecapitalmarketsofthecountryarewellsettoreachsustainableheights.Investors(bothinstitutionsandindividualsalike)willseekbetterreturns,movingawayfromtheconventionalbankingproductofferingtoequitybasedinvestments.NDBSwithitsuniquebrandproposition,itscorporatereputeasalongstanding,trustedstockbroker,ongoinggroupsynergies,know-howandeffectiveriskcontrolscancontinuetocarryoutacatalyticroleinthecountry’scapitalmarket.

Intheshorttomediumterm,NDBSwillbefocusedinitseffortstogainfurthermarketshare,seekingtopenetrateunexploredmarketsegmentswithintheperiphery.Thedistributionnetworkinthisregardwillbestrengthenedanddeveloped-bothintermsofdedicatedbranchesandrepresentationwithintheNDBbranchnetwork.Ascalledforinthecurrentcontextofvolatilitywithinthecapitalmarket,NDBSplanstobraceitsframeworkforriskmanagementwithdecisiveactiontominimisetheconcentrationriskwithintheportfolioandsetfirmcontrolsforeffectivedebtormanagement.



NDB ZEPHYR PARTNERS

Recognisingthetruepotentialofthesmallandmediumenterprises(SME),NCAPsoughttofacilitatethegrowthcapitalneedswhich,byandlarge,falloutsidetheradaroftheorganisedbankingandcapitalmarketarena.ThemovetowardsprivateequitytargetingtheSMEsector,tookshapeinthereportingyear-refined,structuredandwithafirmcommitmentbytheinvestorsandstrategicpartners.

EMERALD SRI LANKA FUND 1

iNvestors Capital CoNtriButioN

usD mN %

NCAP 12.0 28.24

IFC 8.5 20.00

DEG,Germany 10.0 23.53

FMO,Netherlands 10.0 23.53

OtherInvestors 2.0 4.71

Fund Size at First Closing 42.5 100.0

ELIGIBILITY CRITERIA FOR INvESTMENTS

assessmeNt areas Criteria

Structure ▪ PrivatelyheldentitiesincorporatedinSriLanka

▪ AbilityfortheEmeraldFundtogetasignificantminoritystake

Operations ▪ Assetlightbusinessmodelswithreasonablehistoryofoperations

▪ Practicinggoodgovernance

Financials ▪ Profitableortowardsthepathofprofitability

Management ▪ Entrepreneurledprofessionaland coachable management

SustainabilityAttributes

▪ CompliancewithFund’sEnvironmentandSocialManagementSystem

EMERALD SRI LANKA FUND 1Takingoffthelatestventure,SriLanka’slargestprivateequityfund,‘EmeraldSriLankaFund’wassuccessfullylaunchedintheyear,seekingtoaddressthecapitalgapsthatpersistwithintheevolvingSMEsector.

ThisFundproposestoraiseUSD50toUSD60Mnwiththeparticipationofaconsortiumofinvestors-NCAPtogetherwithwell-acclaimedmultilateralagencies-InternationalFinanceCorporation(IFC),theprivatesectorinvestmentarmoftheWorldBankGroup,DEG-DeutscheInvestitions-undEntwicklungsgesellschaftmbH(theGermanInvestmentandDevelopmentCorporation)andFMO-NetherlandsDevelopmentFinanceCompany.Structuredintwotranches-thefirstofwhichhasalreadyclosedinDecember2014whilstthesecondisplannedtocloseinJune2015,theFundhassecuredcommitmentsofUSD42.5Mninthefirstclosing.

InvestmentsthroughthisFundwilltargetwell-establishedandviableSMEsectorcompaniesthatdemonstratethepropensitytoavailgrowthopportunitiesandembracescale.Theinvestmentpercompanyasequityandequity-linkedsecuritiesisexpectedtobeintherangeofUSD2Mnto USD6Mn,aimingatsignificantminoritystakesinexcessof20%.TheFundiscurrentlybuildingupapipelineandisintheprocessofevaluationandduediligenceofpotentialcompaniesindiversesectors,encompassingfastmovingconsumergoods,education,healthcare,logistics,construction,exportsandfinancialservices.

NDB Zephyr Partners Limited.NDBZephyrPartners,ajointventurewitha60:40ownershipstructurebetweenNCAPandZephyrManagementLP,theNewYork-basedinvestmentmanagementcompany,wasestablishedintheyearunderreviewasthemanagingcompanyoftheprivateequityfund.

Bringingintheirkeystrengthstogether-theexpertiseandstrategicpresenceofNCAPwithintheinvestmentbankingdomaininthecountryandthespecialistknowledgeandvastexperienceofZephyrManagementinimplementingandmanagingtheprivateequitymodelintheemergingmarketsofLatinAmerica,AfricaandAsia,havesettheplatformforthe



ventureinprivateequitytomovetowardsitsenvisionedgoals.Thejointventureincollaborationwithstrategicinvestorsiswellpoisedtoadd-value,guideandnurturetheoperationsofitsportfoliocompanies,advocatingbestpracticesinbusiness.Therequisiteexpertiseisavailablebackedbyatalentedteam,synergieswithinthegroupnetworkandsupportsystemstoextendtechnicalknow-howfortheportfoliocompanies,combinedwithassistanceinstrategicplanning,financialandriskmanagement,goodgovernance,supplyandmarketinglinkages,thushelpingtheemergingSMEsectorinvesteecompaniestoreachoperationalexcellenceandmoveontothenextlevel.

Fund Shareholder Agreement Signing with the Investors.

Management Company Agreement Signing with Zephyr.


MANAGEMENT DISCUSSION AND ANALYSIS / FINANCIAL REvIEw

NCAPGrouploggedoneofthebestfinancialyearofitshistorysupportedbyefficientandtimelyassetallocationdecisions,outperforming2013results(adjustedfortheimpactonprofitduetotheone-offinvestmentincomeearnedfromthecashgeneratedthroughthedivestitureofAvivaNDBInsurancePLC)reportingabottomlineofRs.964Mn.

Inordertofacilitatethecomparisonofperformancewiththepreviousyear,the2013figureshavebeenadjustedtoexcludeRs.175Mnone-offinvestmentincomeearnedfromthecashgeneratedthroughthedivestitureofAvivaNDBInsurancePLC,inthediscussionhereafter.

for tHe perioD rs. mN

CompaNy group 2013 2013

aDjusteD*2014 % CHaNge 2013 2013

aDjusteD*2014 % CHaNge

Revenue 784 609 755 24% 1,469 1,294 1,417 9%

OperatingProfit 703 528 641 21% 1,032 857 959 12%

NetProfit 681 506 665 31% 932 757 964 27%

NPMargin 86.9% 83.1% 88.0% 6% 63% 59% 68% 16%

ROE 12.8% 9.6% 11.3% 17% 16.1% 13.3% 15.6% 18%

ROA 12.7% 9.6% 11.2% 17% 15.0% 12.4% 14.3% 15%

note: *2013 figures have been adjusted to exclude Rs. 175 Mn one-off investment income earned from the cash generated through the divestiture of Aviva ndB Insurance PLC

as at tHe eND of rs. mN

CompaNy group 31-DeC-13 31-DeC-13

*aDjusteD31-DeC-14 % CHaNge 31-DeC-13 31-DeC-13

*aDjusteD31-DeC-14 % CHaNge

InvestmentsinGroupCompanies 995 995 995 0% - - - N/A

OtherInvestments 4,736 4,561 5,005 10% 5,659 5,484 5,909 7%

OtherAssets 14 14 176 1154% 884 884 1,017 15%

TotalAssets 5,745 5,570 6,176 11% 6,543 6,368 6,926 8%

StatedCapital 1,329 1,329 1,329 0% 1,329 1,329 1,329 0%

Reserves 4,370 4,195 4,765 14% 4,523 4,348 5,203 18%

MinorityInterest - - - 0% - - (0) 100%

TotalEquity 5,699 5,524 6,094 10% 5,852 5,677 6,532 14%

TotalLiabilities 46 46 83 78% 691 691 394 -43%

TotalEquityandLiabilities 5,745 5,570 6,176 11% 6,543 6,368 6,926 8%

note: *2013 figures have been adjusted to exclude Rs. 175 Mn one-off investment income earned from the cash generated through the divestiture of Aviva ndB Insurance PLC

GRI - G4/ G4 - 9 G4 - 17 G4 - 22


REvENUE AND PROFITABILITYTherevenueandprofitabilityperformanceofNCAPfortheyear2014incomparisontotheprecedingyearisgiveninthechartbelow.

NCAPrecordedastrikingrevenuegrowthof24%,increasingthetotalincometoRs.755Mnin2014fromRs.609Mninthepreviousyear.NetprofitsforthecurrentyearrosetoRs.665MnfromRs.506Mnintheprioryear,ariseof31%.Profitabilitygrowthwasmainlyfueledbyefficientassetallocationtowardshighyieldinginvestmentsandtaxefficientinvestmentstrategies.Accordingly,NCAPincreaseditsexposuretothelistedequityinvestmentstobenefitfromthemarketrun,mostlyvisibleinthesecondandthirdquartersof2014.NCAPvigilantlyslasheditsequityexposurebythefourthquarterasthemarketturnouttobemorevolatilewiththepoliticaluncertaintyaftertheannouncementofthepresidentialelection.

ThecompositionoftheCompany’srevenueisgiveninthechartbelow.

Asindicatedbythechartabove,36%ofrevenuewasgeneratedthroughinvestmentsinunittrusts,ataxefficientmodeofinvestments.Rs.257Mncontributingto34%ofincomewasdrivenbyequityinvestmentsresultinginimpressivereturnsof35%fortheyear2014(ASPIreturns:23.44%).

Asdepictedinthechartbelow,theGroupconsolidatedincomeincreasedby9%toRs.1,417Mnduringtheyear2014fromRs.1,294Mnin2013.ThisgrowthinrevenuetranslatedtoaconsolidatednetprofitabilityofRs.964Mnfortheyearunderreview,anincreaseof27%overRs.757Mnrecordedintheprioryear.

MANAGEMENT DISCUSSION AND ANALYSIS / FINANCIAL REvIEw (Contd.)

Interest Income 19%

Unit Trust Income 36%

Equity Income 34%

Other Income 11%comPaNY reveNue comPoSItIoN - 2014

comPaNY PerformaNce

0100200300400500600700800

Rs.Mn

2013 2014

Company Revenue (Rs. Mn) Company Profit (Rs. Mn)

coNSolIDateD PerformaNce

0200400600800

1,00012,00014,00016,000

Rs.Mn

2013 2014

Group Revenue (Rs. Mn) Group Profit (Rs. Mn)


ThefeebasedoperationsoftheNCAPGroupcontributed48%oftheconsolidatedincomeasexhibitedbythechartbelow.

ThehighestcontributiontofeebasedrevenuewasbywayoffeesearnedbywealthmanagementoperationswhichaddedasumofRs.347Mn.Thisrepresentsover50%shareoffeebasedincomeduringtheyear.WealthManagementoperationshaveincreasedtheirassetsundermanagementby34%duringtheyear2014toRs.87Bn,drivingamajormilestonebyrecordinganaggregateofRs.100BninAssetsUnderManagement(AUM)withinNCAPgroupbyJanuary2015.

Returnonequity(ROE)isconsideredoneoftheprincipalperformanceindicatorsfortheinvestors.TherestructuringcarriedoutatNDBGrouplevelincreatingapurecapitalmarketsplaybyNCAPisgraduallystartingtoshowresultswiththeimprovedROEforbothcompanyandgrouplevelasshowninthegraphabove.TheGroupROEimprovedto15.6%forthe

financialyear2014from13.3%in2013.Inthesameperiod,theCompanybettereditsROEby19%to11.3%.LookingbackattheROEspriortotherestructuring,theGrouphasshownahighlyimpressiveturnaroundwiththeconsolidatedROEwhichstoodat7.0%in2011increasingto15.6%bytheendof2014.

NCAPmadeasuccessfulstructuredequityinvestmentinthelistedspaceduringtheyear.NCAPtogetherwithACLCablesPLCandTrydanPartners(Pvt)Limitedacquireda75%stakeinResusEnergyPLC(formerlyknownasHemasPowerPLC)inDecember2014.TrydanPartners(Pvt)LimitedisaspecialpurposevehiclebackedbythemanagementteamofResusEnergyPLC.ThisinvestmentisexpectedtoyieldattractivereturnswithplannedcapitalrestructuringofResusEnergyPLCandimplementationofnewpowerprojectsthatareinthepipeline.NCAPispresentlyintheprocessofcreatingaportfolioofstructuredequityinvestmentsespeciallythroughitscommitmenttotheprivateequityfundtoprovidelongtermsustainablereturnstoshareholders.

DIvIDEND POLICYThedividendpolicyofNCAPisbasedonmaximisingshareholderwealththroughstrikingabalancebetweenprofitretentionanddividendpayouttoensureavailabilityofadequateinvestiblefundsforthefuturegrowth,culminatingincapitalappreciation.

Investments 52%

Wealth Management 25%

Investment Banking 12%

Stock Brokering 12%GrouP SeGmeNtal reveNue 2014

returN oN equItY

0%2%4%6%8%

10%12%14%16%

%

2013 2014

Company Group


our approach to stakeholder engagement is practical and hands-on, with customised solutions, whereVer possiBle, to address their needs, concerns and issues most significant to them whilst seeking a ‘Best-fit’, well-suited for our strategic Value-creation process and the goals therein.

MANAGEMENT DISCUSSION AND ANALYSIS / SUSTAINABILITY IN FOCUS


STAKEHOLDER ENGAGEMENT

APPROACH TO ENGAGEMENTBeingatthehelmofinvestmentbankinginthecountryandapartofanesteemedgroup,NDB,itisabsolutelyvitalthatwebuildprogressiverelationshipswithourstakeholders,responsivetotheirmultifacetedexpectations.Weunderstandthechallengesentailedinshapingouroperationstomeetthevarieddemandsofeachandeverystakeholdersegment.Ourapproachtostakeholderengagementispracticalandhands-on,withcustomisedsolutions,whereverpossible,toaddresstheirneeds,concernsandissuesmostsignificanttothemwhilstseekinga‘best-fit’,well-suitedforourstrategicvalue-creationprocessandthegoalstherein.ThestakeholderengagementprocessatNCAPisdynamic-quicktoadaptwiththechangesthatareinherentwithinourfast-pacedworldwhilstbeingforthrightandresponsible.

IDENTIFICATION OF KEY STAKEHOLDERSRefer Materiality Analysis, pages : 67-74

Duringabrainstormingsessionofourseniormanagement,aswillbediscussedunderthe‘MaterialityAnalysis’sectionofthisAnnualReport,stakeholdergroupstakenintoconsiderationindrawingupthe‘StrategicPlan2012-2017’wasreconsideredandrevalidated.

Basedonthestakeholder’slevelofinfluenceandtheirlevelofinterestoftheNCAPGroupanditsoperations,wesoughttoprioritiseandcomeupwithalistofkeystakeholders.Wealsolookedatthelevelofmanagementrequiredtokeepthestakeholdergroupsengaged.Thebrainstormingresultsonthestakeholderanalysisaretabulatedbelow,alongwiththeprioritisedlistofstakeholders,theirexpectationsandengagement.

GRI - G4/ G4 - 24 G4 - 27

Employees

ParentCompany

iNterNal stakeHolDers

MinorityShareholders

Clients

GovernmentandRegulators

StrategicPartners

Community

Media

Suppliers

AdvocacyGroups

exterNal stakeHolDers


MANAGEMENT DISCUSSION AND ANALYSIS / SUSTAINABILITY IN FOCUS (Contd.)

stakeHolDer prioritisatioN

Stakeholder Level of Influence Level of Interest Level of Management

Internal Stakeholder

ParentCompany High High Engageandmanageclosely

Employees High High Engageandmanageclosely

External Stakeholder

MinorityShareholders Medium High Keepsatisfiedandinformeddespitebeingade-listedentity

Clients High High Engageandmanageclosely

StrategicPartners Medium Medium Keepsatisfied

Suppliers Low Low Monitor

Community Low Medium Keepsatisfied

Government/Regulators High Medium Engage,complywithrulesandregulationsandreport

Media Medium Medium Keepinformed

AdvocacyGroups High Low Engage,whenandifnecessary

key stakeHolDer eNgagemeNtstakeHolDers eNgagemeNt frequeNCy expeCtatioNs/

CoNCerNsNCap group’ssolutioNs

ParentCompany ▪ Boardreports▪ Management

reports▪ AnnualReport▪ ProgressReview

Meetings▪ AnnualGeneral

Meeting▪ Extraordinary

GeneralMeeting

▪ Monthly▪ Quarterly▪ Annually

▪ Operations,profitabilityandreturns

▪ Governance▪ Businesspractices

and ethics▪ Riskmanagement▪ Internalcontrols▪ Compliance▪ Socialresponsibility▪ External

Environment▪ Competition

▪ Operatewithafocusedstrategyandmonitor targets

▪ Goodgovernancefollowedasperacceptedguidelines

▪ Strongcompliancefunctiontomonitoronbusinesspractices

▪ Consistentlyimprovethe risk management system

▪ Structuredsocialresponsibility




Employees ▪ Teammeetings▪ Generalstaff

meetings▪ Clustermeetings▪ Performance

appraisals▪ Training

programmes▪ Staffcirculars

▪ Regularly ▪ Skillsdevelopment▪ Performance

appraisals▪ Careerdevelopment▪ Equalopportunity▪ Fairrecognition,

rewardsandcompensation

▪ Empowerment

▪ Leadershipandtechnical training

▪ Transparentandinteractiveperformanceappraisals

▪ Careerplanning▪ Marketbased

remunerationandperks

MinorityShareholders ▪ AnnualReport▪ AnnualGeneral

Meeting▪ Extraordinary

GeneralMeeting▪ Formal

correspondence

▪ Annually ▪ Profitabilityandreturns

▪ Governance▪ Businesspractices

and ethics▪ Protectionof

minorityinterestandfair dealing

▪ Extendfairandjusttreatment in line withlistedcompanyvalues

▪ Upholdbestbusinesspractices

▪ Disseminatetimelyinformationoncorporateaffairsthrough disclosures andpressreleases

▪ Engageandmakearrangements forminorityshareholders to participateandvoteatgeneralmeetings

Clients ▪ One-to-onemeetings

▪ Correspondence▪ Printmedia▪ Officialwebsite

▪ Regularly ▪ Customised,speedyandflexibleproductsand services

▪ Advisoryservicesonproductoptions

▪ Relationshipmanagement

▪ Businessethics▪ Confidentiality▪ Education▪ Informationsharing

▪ Trainingemployeesonrelationshipmanagement and products

▪ Dueinvestmentsinstate-oftheartsystemsandstreamlined processes

▪ Strongcompliancefunctiontomonitorbusinesspractices




GovernmentandRegulatoryBodies

▪ Correspondence▪ Disclosures▪ Meetings▪ Audits

▪ Monthly▪ Quarterly

▪ Timelytaxpayments▪ Compliance

tostatutoryandregulatoryrequirements

▪ Strongcompliancefunctiontomonitorbusinesspractices

▪ Follow-upongoodgovernancewithBoardcommittees

StrategicPartners ▪ Correspondence▪ One-to-one

meetings▪ Conferences▪ Workshops▪ Road-shows

▪ Asandwhenrequired

▪ Qualityandreliabilityofservices

▪ Businesspracticesand ethics

▪ Internalcontrols▪ Compliance▪ Socialresponsibility

▪ Dulyreportontheorganisationsplansandperformance

▪ Riskmanagementwithparentexpertise

▪ Independentinternal controls

▪ Strongfirewalls

Community ▪ Awarenessprogrammes

▪ Discussionswithcommunityleaders educators andpolicy-makers

▪ Periodically ▪ Financialinclusivity▪ Creatingbusiness

opportunities▪ Marketawareness

andproductoptions▪ Philanthropy

▪ Structuredsocialresponsibility

▪ PrivateequityventuretopromotetheSMEsector

▪ Awarenessbuildingprogrammesonthemarket

Media ▪ Pressreleases▪ Pressbriefings

▪ Asandwhenrequired

▪ Operationalandfinancialperformance

▪ Financialinclusivity▪ Businesspractices

and ethics▪ Socialresponsibility▪ Productlaunches

▪ Pressbriefingsonsignificanteventsandperformanceperiodically

▪ Periodicpressreleases

▪ Rapportwithmediainstitutions



MATERIALITY ANALYSIS

ThereportisdevelopedanddefinedonthelinesofthereportingprinciplessetoutbyGRI-G4covering‘materiality,stakeholderinclusiveness,sustainabilitycontextandcompleteness’.Materialitywasprincipallylookedatfromastrategicperspectiveandtheimplicationsandinfluencesfromkeystakeholders.MaterialityanalysiscoverstheoperationsofNCAPanditsthreefully-ownedsubsidiariesinSriLanka-NDBIB,NDBWBandNDBSalongwithpertinentdeliberations,whereverapplicable,tothenewjointventure,NDBZformedwithaNewYorkbasedfundmanagingpartnerontheprivateequitybusiness.Materialityanalysisalsocoverstheworkingtieswithitsparentcompany,NDBwhichhasa99.9%stakeofNCAPownershipwiththede-listingthatcameintoeffecton26thJanuary2015.

Thereporthasnotrestatedinformationprovidedintheprecedingyear.

MATERIALITY ASSESSMENT PROCESSRefer Management Discussion and Analysis pages : 32 - 33

MaterialityanalysisdiscussedinthisAnnualReportwastakenupata‘brain-stormingsession’withtheparticipationoftheseniormanagementofNCAP.Thedecisionstakenthereinwerevalidatedbytherespectiveheadsofoperationsofthethreesubsidiariesalongwiththeirseniorteammembersataclustermanagementmeeting.

Atthebrain-stormingsession,theseniormanagementrevisitedandreviewedthefindingsanddecisionstakenduringstrategicplanningheldin2012whichformedthebasisofthecurrentfive-yearStrategicPlanpreparedfor2012-2017.Thekeyassumptions,risks,opportunitiesandstrategicprioritiesidentifiedunderthisPlanassetoutintheManagementDiscussionandAnalysisofthisAnnualReportunderscoredtheidentificationofmaterialaspects,inturn,determiningthereportcontent.Stakeholderexpectationsasrevalidatedabovesupportedthequalitativeanalysisandresults.

ThelonglistcomprisedthematerialaspectsgiveninGRI-G4andinthesectorguidelinesforfinancialservices.Thelong-list,asthefirststep,wascarefullyevaluatedintermsofthesustainabilitycontext,centeredontheimpacteachaspecthasontheorganisation,strategy,goalsandoperationscoupledwiththeimpactontheidentifiedkeystakeholders.Thelong-list,then,wastapereddowntoashort-listbasedonthelevelofsignificanceofthisimpact:high,mediumandlow.

Asthenextstep,theshort-listwasconsideredonthebasisofmateriality,drawingontherelevantaspectboundaries-organisation,internalandexternalstakeholdersandprioritisedonthethree-levelbasis-high,mediumandlow.Materialitywasthenestablished,settingoutthelevelofsignificancetotheorganisationandinternalstakeholdersandtoexternalstakeholderswhichsupportedustodefinethereportcontent,givingprioritytoareasthathaveacombinationof‘high’and‘medium’forbothgroups.Aspectsthatareidentifiedwithacombinationof‘medium’and‘low’significanceforbothgroupshavenotbeengivenpriorityindevelopingthereportingcontent.

TheanalysisisqualitativebasedonthejudgmentsoftheseniormanagementandtheresultsarevalidatedbytheChiefExecutiveOfficeroftheorganisation.

GRI - G4/ G4 - 18 G4 - 19G4 - 20G4 - 21


Colour Keys

High

Medium

Low

sustaiNaBility CoNtext assessmeNt

aspeCts level of sigNifiCaNCeCategory: Economic

EconomicPerformance High

MarketPresence Low

IndirectEconomicImpact Medium

ProcurementPractices Low

Rationale:▪ Operatingattheforefrontofinvestmentbankingwithinanemergingcapitalmarketbackdrop,creatingeconomicvalue

anddistributingamongststakeholdersfallwithinthecoreoperationsandthusthemostmaterialaspectforNCAPandthesubsidiaries.

▪ Theengagementinlarge-scaleinvestmenttransactionsininfrastructureandservicesincludingstructuringfinance,equityparticipationandadvisoryservicesalsohasanindirectimpactontheeconomyandbroadlyonthesociety.

▪ Procurementforaninvestmentbankingorganisationislimitedrelativetotheoperationsandthereforeprocurementpracticesisnotmaterial.

▪ Giventhelowerpenetrationofinvestmentbankingserviceswithintheperipheryofthecountry,theaspectofmarketpresenceisnotsignificantasyet.

Category: Environment

Materials Low

Energy Low

Water Low

Biodiversity Low

Emissions Low

EffluentsandWaste Low

ProductandServices Low

Compliance Medium

Transport Low

Overall Low

EnvironmentalGrievanceMechanism Low




aspeCts level of sigNifiCaNCe

Rationale:▪ Asspecialisedservicesbasedorganisation,theutilisationofresourcesforvaluecreationandtheimpactofoperationson

theenvironmentisnotthatsignificant.Although,thereisutilisationofenergyinoperationsandresourceslikepaper,thematerialityonthetotaloperationalimpactislow.

▪ Asaresponsibleorganisation,followingrulesandregulationsintermsoftheenvironmentisimportant.GiventheGroup’stieswithstrategicpartnersincludingmultilateralagencies,complianceisakeyaspect.

Category: Social- Labour Practices and Decent workers

Employment High

LabourManagementRelations Low

TrainingandEducation High

DiversityandEquality High

EqualRemunerationForMenandWomen High

SupplierAssessmentForLabourPractices Low

LabourPracticesGrievanceMechanism Low

Rationale:▪ Asaserviceorganisationrelyingonemployeeproficiency,dedicationandloyalty,addressingemployeeaspectsarerelevant

andmostsignificanttoensuretheirsatisfactioninturnunderscoringthesustainabilityoftheorganisation.

Category: Social - Human Rights

Investment Medium

NonDiscrimination High

FreedomofAssociationandCollectiveBargaining Low

ChildLabour Low

ForcedorCompulsoryLabour Low

SecurityPractices Low

IndigenousRights Low

Assessments Low

SupplierHumanRightsAssessments Low

HumanRightsGrievanceMechanism Low

Rationale :▪ Upholdingbusinessethicsisvitaltosustainingthebrandandimage.Thestrategicpartnersincludingbi-lateraland

multilateralfinancialinstitutionsexpectanddemandbestpracticesinhumanrightsaspectspriortoengagingandsustainingrelationships.



aspeCts level of sigNifiCaNCe

Category: Social -Society

LocalCommunities Low

Anti-Corruption High

PublicPolicy Low

Anti-CompetitiveBehaviour High

Compliance High

SupplierAssessmentsforImpactsonSociety Low

GrievanceMechanismforImpactsonSociety Low

Rationale:▪ Inkeepingwiththeroleasaprominentinvestmentbankingorganisation,socialandbusinessresponsibilityiskeytogain

trustandrespectfromthepublic,clientsandstrategicpartners.▪ Theorganisationdoesnotengageandhavesignificantimpactsonpeopleinlocalcommunities.

Category: Social-Product Responsibility

CustomerHealthandSafety Low

ProductandServiceLabeling High

MarketingCommunication Low

CustomerPrivacy High

Rationale:▪ Extendingaresponsibleproductofferwithinadynamicindustry,cateringtodiverseinvestorsegmentsiscoretothe

sustainabilityofoperationsintermsoftrust,loyaltyandretainingclients.

Financial Services Category: Social-Product Portfolio

ProductPortfolio Medium

Audit Medium

ActiveOwnership Medium

Rationale :▪ Theinvestmentbankingarmstructuresfinance,sourcesandadvisesmediumtolarge-scaleprojectswhichmayhave

environmentalandsocialimplications.AddressingtheseimpactsisnecessarytoupholdtheGroup’ssolidrepute.Thisisalsosoughtafterbyourstrategicpartners,investorsandperhapsifsignificant,bytheadvocacygroups.

▪ Thereisnotasignificantactiveownershipwithinmostoftheequityinvestmentswithvotingrightstomakedecisionswhichhaveenvironmentalandsocialimplicationsexceptwithrespecttothejointventureonprivateequitywhichwasestablishedinthereportingyear



materiality assessmeNt

aspeCt materiality - iNterNal BouNDary materiality - exterNal BouNDaryNCap group/key stakeHolDers

level of sigNifiCaNCe

key stakeHolDers level of sigNifiCaNCe

Category: Economic

EconomicPerformance ▪ NCAPandSubsidiaries

▪ ParentCompany▪ Employees

High ▪ MinorityShareholders▪ Clients▪ Governmentand

Regulators▪ StrategicPartners▪ Community

High

IndirectEconomicImpact Medium Medium

Category: Environment

Compliance ▪ NCAPandSubsidiaries

▪ ParentCompany

Medium ▪ StrategicPartners▪ Governmentand

Regulators▪ Media

Medium

Category Social: Labour Practices and Decent workers

Employment ▪ NCAPandSubsidiaries


High ▪ Clients▪ StrategicPartners

Medium

TrainingandEducation High Medium

DiversityandEquality High Medium

EqualRemunerationforMenandWomen

High Medium


Investment ▪ NCAPandSubsidiaries


Medium ▪ MinorityShareholders▪ StrategicPartners▪ Governmentand

Regulators▪ Media

High

NonDiscrimination Medium High

Category: Social - Society

Anti-Corruption ▪ NCAPandSubsidiaries

▪ ParentCompany

High ▪ MinorityShareholders▪ Clients▪ StrategicPartners▪ Governmentand

Regulators▪ Media

High

Anti-CompetitiveBehaviour High High

Compliance High High


materiality assessmeNt

aspeCt materiality - iNterNal BouNDary materiality - exterNal BouNDaryNCap group/key stakeHolDers

level of sigNifiCaNCe

key stakeHolDers level of sigNifiCaNCe

Category: Social - Product Responsibility

ProductandServiceLabeling ▪ NCAPandSubsidiaries

▪ ParentCompany

Medium ▪ Clients▪ StrategicPartners▪ Governmentand

Regulators

High

CustomerPrivacy Medium High

Compliance Medium High

MarketCommunications

Financial Services Sector Category: Social - Product Portfolio

ProductPortfolio ▪ NCAPandSubsidiaries

▪ ParentCompany

Medium ▪ Clients▪ StrategicPartners▪ Regulators

Medium

Audit Medium Medium

ActiveOwnership Medium Medium



materiality matrix

Sign

ifica

nce

to E

xter

nal S

take

hold

ers

High

▪ HumanRights-Investment▪ NonDiscrimination▪ CustomerPrivacy▪ ProductandServiceLabelling▪ ProductResponsibility-

Compliance

▪ EconomicPerformance▪ Anti-Corruption▪ Anti-CompetitiveBehaviour▪ Society-Compliance

Med

ium

▪ EnvironmentAspects▪ SupplierChainManagement▪ SocialandEnvironment

GrievanceMechanisms▪ CustomerHealthAndSafety▪ PublicPolicy

▪ IndirectEconomicImpacts▪ Environnent-Compliance▪ ProductPortfolio▪ Audit▪ ActiveOwnership

▪ Employment▪ TrainingandEducation▪ DiversityandEqualOpportunity▪ EqualRemunerationForMenand

Women

Low

▪ MarketPresence▪ LabourManagement

Relations▪ FreedomOfAssociationand

CollectiveBargaining▪ LocalCommunities▪ SecurityPractices▪ IndigenousRights

▪ MarketingCommunications▪ ProcurementPractices▪ OccupationalHealthandSafety

Low Medium High

Significance to Internal Stakeholders

Refer Detailed GRI - G4 Content Index, pages : 121-126


materialityDefiNiNg report CoNteNt

material aspeCt maNagemeNt approaCH

page refereNCe report Coverage

Category: Economic

▪ EconomicPerformance▪ IndirectEconomicImpacts

EconomicValueCreation 75-79 Extensive

Category: Environmental

▪ Compliance Environment 83 Limited

Category: Social - Labour Practices and Decent work

▪ Employment▪ TrainingandEducation▪ DiversityandEquality▪ EqualRemunerationforWomenand

Men

HumanCapital 84-89 Extensive


▪ Investment▪ NonDiscrimination▪ ChildLabour▪ ForcedorCompulsoryLabour

ProductResponsibilityandHumanCapital

80-82and84-89 Moderate

Category: Social -Society

▪ Anti-Corruption▪ Anti-CompetitiveBehaviour▪ Compliance

EthicsandComplianceManagementandProductResponsibility

90-97and80-82 Extensive

Category: Social Product Responsibility

▪ Productandservicelabeling▪ CustomerPrivacy▪ Compliance

ProductResponsibilityandEthicsandComplianceManagement


Social: Product Portfolio (Sector Disclosure)

▪ ProductPortfolio▪ Audit▪ ActiveOwnership

ProductResponsibilityandRiskManagement




ECONOMIC vALUE CREATION

NCAPinitsleadingrolewithintheinvestmentbankingdomain,underscoredbythebrand,financialprowessandmainstayofNDB,iswellpositionedtocreateeconomicvaluewithfar-reachingbenefitstosociety.NCAPtogetherwithitsgroupcompanieshasthespiritandtheexpertisetoreachouttodiversestakeholdersegmentsinitsvaluecreationprocess-beitasreturnstotheshareholders;careersandadvancementforemployees;businessopportunitiesandfundingforentrepreneurs;taxesforpublicsectorprogress;valuetothecommunity;andbestinbusinesspracticesfortheindustrytoemulate.

THE APPROACHInthebackdropofaburgeoningeconomy,weoperateunderafull-serviceinvestmentbankingmodel,encompassingbothfeeandfundbasedactivities.Ourapproachtovaluecreationismulti-layered,withalongtermstandpoint-harmonisingourbusinessgoalswithcorporateresponsibilityanduprightness.Wecreatesignificantvalueandcontributeimmenselythroughourcomprehensiveproductoffer,ourinvolvementinlarge-scaledeals,ourcollaborationswithinthegroupandparentcompanyandourstrategicties.

TOTAL SOLUTIONWeseektoextendatotalsolution,tailor-madetomeetdiversefinancialrequirementsandrisk-returnprofilesofinstitutions,high-net-worthindividualsandeventheretailsegment.Ourbusinesses,offerarangeofproductsininvestmentbanking,securitiestrading,wealthmanagement,andprivateequitymanagement.Ourapproachadvocatescross-sellingandproductbundlingbetweensubsidiariesandwithourparentwhilstnewproductdevelopmentissoughtafterwithinnovativefinancialproductssuitedtospuractivitywithintheemergingbusinesslandscapeinthecountry.

LARGE SCALE TRANSACTIONSOurproductstrategyalsoencompasseslarge-scaleandcomplexdealswithinbothdebtandequitymarkets.Ourexpertiseinstructuringandplacingfinancialsolutionsandadvisoryserviceshasfacilitatedcapitalwithcompetitivetermstostimulateentrepreneurismindiversesectors.Whereverfeasible,wehavealsotakenupequityparticipationinsuchprojects,aimingatlong-termreturnswhilstalsopavingthewayformergersandacquisitionsforsectorconsolidations.This,inturn,hasreinforcedourforteincreatingsignificantvalue,withcascadingbenefitsandwithgreaterindirectimpactontheeconomy.

COLLABORATIONSOurvaluecreationprocessisalsosupportedbyourcollaborationswithourparent-sharingproductknowledgeandexpertisetobeeffectiveinextendingatotalpackageandtakingontransactions.Parent’ssupportisalsoleveragedintermsofaccessingacosteffectivedistributionchannelthroughitsbranchnetworkwhilstintegratingadministrativefunctionsincludingprocurement,enablingcostrationalisation.Parent’sriskmanagementandgoodgovernancepracticeshavealsobackedourstanceindeliveringourstrategyresponsibly,leadingthepathtosustainablevaluewithinthenetwork.

Apartfrominternalsynergies,wealsolookuponourstrategicpartnersincludingmultilateralagenciestosupportourundertakingsintermsofcapitalinfusion,technicalandmarketknow-how,andbestinternationalpractices,empoweringustotakeondynamicopportunitiesbuddinginoureconomy.

NCAP Group Sharing value

Employees’SalariesandDefinedObligation:Rs.266Mn

SuppliersPayments:Rs.211Mn

ShareholdersRs.905Mn

CommunityInitiatives:Rs.3Mn



PRIvATE EqUITY AND SMEsRefer Management Discussion and Analysis, pages : 57 - 58

Besideourengagementonthecapitalmarketplatform,wealsofacilitatewealthcreationthroughprivateequity.TargetingthepotentialoftheSMEsector,ourinitiativesinprivateequityseektosupportthecapitalbasewhichisfoundwantingandnotaddressedthroughconventionalchannelsinbankingandfinancenorsophisticatedenoughtocomeundertherealmofcapitalmarketfunding.

Thejointventureandthededicatedprivateequityfund-‘EmeraldSriLankaFundI’whichtookoffduringtheyearwithstrategiccollaborationsasdiscussedindetailunderthe‘ManagementDiscussionandAnalysis’isexpectedtopaveanidealplatformfortheemergingSMEsectortosecureitsplaceasasignificantpartnertotakethecountry’sdevelopmentagendaforward.

Addingfurthervalue,wealsoengageandsupportSME-focusedorganisationsviz.financeandleasingcompaniestoraisethenecessarycapital,particularlythroughsecuritisationsanddebentures;indirectlyleadinguptosmallandmediumentrepreneurism.

ECONOMIC vALUE ADDITIONAsdiscussedindetailunderthe‘ManagementDiscussionandAnalysis’,theNCAPGroupintheyear2014reinforceditspresenceasadominantinvestmentbankingentitywithstrongoperationalandfinancialresults.Oureconomicvalueadditionas set out in the value added statement totalled to Rs.1,417Mn,outofwhichRs.1,379Mnwasdistributedamongstourstakeholders,correspondingto93%ofthevaluegenerated.Thevalueretainedwithintheorganisationwas Rs.97Mn,correspondingto7%.

vALUE ADDED STATEMENTFor the period Rs. Mn Group 2013 % 2014 %

How we Created valueInterestIncome 160 11% 231 16%UnitTrustIncome 602 41% 317 21%EquityIncome 75 5% 227 15%FeeIncome 631 43% 555 38%OtherIncome - 0% 87 6%ShareofAssociateCompany’sProfit - 0% 59 4%Total value Creation 1,469 100% 1,476 100%

How we Shared valueToEmployees 261 33% 266 19%ToOtherServiceProviders 143 18% 211 15%ToGovernmentasTaxes 99 13% (5) 0%ToProvidersofCapital(ProposedDividend) 280 36% 905 66%ToCommunityInitiatives 2 0% 3 0%Total value Shared 786 100% 1,379 100%

Depreciation 31 2% 38 3%RetainedProfits 652 44% 59 4%

TotalValueRetainedwithintheBusiness 683 47% 97 7%TotalValueShared 786 53% 1,379 93% 1,469 100% 1,476 100%

GRI - G4 / eC1


SHAREHOLDER RETURNSComplementedbythestrengthofourconsolidatedfinancialperformanceintheyearunderreview,wewereabletoextendsoundreturnstoourparentcompany.OurconsolidatedrevenuereachedRs.1,417MnwithprofitsattributableforshareholdersatRs.964Mn.TheproposeddividendfortheyearisRs.905withapay-outratioof94%.

SUPPLY CHAINAsaninvestmentbankingoperation,oursupplychainisnotextensiveanddoesnotentailtherangeofprocessesthatbroadlyfallundersourcinganddeliveringwithinasupplychain.Oursupplychainismoreorlesslimitedtoprocessesofsourcingstationeryproducts,officefurniture,equipmentinclusiveofITsystems-hardwareandsoftware.

Withinthis,ITrelatedsuppliestakeupgreaterinvestmentandbeardirectconsequencesonouroperations,particularly,forwealthmanagementandstockbrokingbusinesses.Thisismoresointoday’scontextwhereweplacerelationshipmanagementatcentre-stagewithprioritygiventototalsolutionscombiningproductsacrossthegrouporganisations,customisationandspeedyandflexibletransactions.

InconsultationwithourparentcompanyhandlingITasacentralisedfunction;wetakeheedonquality,standardsandcost-benefits.WealsogivedueconsiderationtointellectualpropertyrightsinprocuringIThardwareandsoftware.Ourprocurementselectionsarecarefullyweighed,givingpreferencetosupplierswhoareresponsibleandcredibleintheirprocessesandinthefinalproduct.

Inthereportingyear,ataconsolidatedlevel,weincurredasumofRs.211MnonsuppliesincludingIThardware,softwareandtechnicalsupport.Thiscorrespondedto15%ofthetotalrevenue.

EMPLOYEE BENEFIT OBLIGATIONSRefer Human Capital pages : 84 - 89

Withinaspecialisedindustry,peoplefactoraswillbediscussedatlengthunderthe‘HumanCapital’section,isthemostvitalfacetthatunderscoresthesustainabilityoftheorganisation.

Supportingourteamof137employeesacrosstheGroupinclusiveof52newrecruitswithintheyearunderreview,weareconscientiousinourapproachtoHRmanagementandensurethatbestpracticesarefollowedinter-alia,fairremunerationonparwiththemarket,perksandrewards.

Wehaveinplaceastructuretoensurethatallduedefinedcontributionobligationsarefullymetasperthesetguidelines.NCAPcontributes12%toEmployeeProvidentFund(EPF)and3%totheEmployeeTrustFund(ETF)asstipulatedwhilsttheemployeecontributes8%toEPF.Inthereportingyear,onaconsolidatedbasis,asumofRs.21.5MnwasprovidedforEPFandRs.5.4MnforETF.GratuityprovisionsreachedRs.10.3Mn.

RESPONSIBLE TAx PAYERWearediligentandtimelyinmeetingourtaxobligations.Intheyearunderreview,thesubsidiariesofNCAPmadeaprovisionofRs.29MnforincometaxwhiletheNCAPGrouphadataxrefundduefromtheDepartmentofInlandRevenue.

SOCIAL RESPONSIBILITY INITIATIvESEmpowering YouthEmpoweringyouthisthemostsignificantsocialfacetthatbringsbroadertrickle-downbenefitstowardsasustainableeconomy.Inaknowledge-drivenindustrysuchasours,thisfacethasadirectlinktoourbusinessesfromastrategicperspective.

Inthislight,wecontinuewithoureffortstogivecareeropportunitiesforskilledandtalentedyouthwithinourorganisation.OurmanagementtraineerecruitmentprogrammecomplementedbyourtieswithSriLankanuniversitiesasdiscussedunderthe‘HumanCapital’sectionhasenabledustoidentifyandselectthetoptalentamongstlocalgraduatesandnurturetheircareerswithduetrainingtomouldthemintofutureleaderswithinourorganisation.

NDB Capital Scholarship TrustAsinitiatedintheprecedingyear,wecementedourcommitmenttowardsundergraduatedevelopment,formallysettinguptheNDBCapitalScholarshipTrust.Themandatesetsoutfinancialsupportforunderprivilegedandtalentedundergraduatescoveringtheiracademiclifeoffouryearsatnationaluniversities.Apartfromfinancialsupport,theTrustwill

GRI - G4/ G4 - 12 eC3


alsoextendcareerguidance,leadershiptrainingprogrammesandopportunitiesforinternshipswithintheNCAPnetwork,differentiatingthescholarshipschemefrommostothersthatarepurelybasedonfinancialassistance.

Intheyearunderreview,weawardedthefirstroundofscholarshipstotenundergraduatespursuingtheiracademicstudiesinengineering,medicine,lawandmanagementattheUniversityofMoratuwa,UniversityofSriJayewardenepuraandUniversityofColombo.Theselectionprocesswastransparentandcarefullystructuredonfinancialneedandmeritincludingacademicwork,leadershipqualitiesandextra-curricularactivities.

TheScholarshipTrustisfundedbytheprofitsofNCAPanditsthreekeysubsidiariesNDBIB,NDBWMandNDBS.ThemanagementoftheTrustfallsunderthepurviewoftheBoardofTrustees.NCAPmadeacontributionofRs.2.5Mntothefundduringtheyear2014.

DEvELOPING THE RETAIL SEGMENTAsatop-notchinvestmentbankingorganisation,wearecommittedtosupportcapitalmarketdevelopmentandtherebyaccruegreaterbenefitstotheeconomy.Wehavethecapabilityandthecapacitytotakecapitalmarketsbeyondthescopeofcorporatesandhigh-net-worthindividualsandreachouttothepotentialofretailmarkets.OursynergieswithNDBbranchnetworkandourdedicatedsecuritiestradingbranchestotallingtonineasattheyear-endhaveaidedustobemoreinclusive,evenreachtheunexploredretailersegmentwithintheperiphery.

Ourawarenessbuildingprogrammes,someincollaborationwiththeindustryincludingtheSECofSriLankaandCSE,createawarenessonthemarketandontheoptionsavailablewithustowidentheirinvestmentprospects,thus,influencingandencouraginggreaterparticipationfromthepublic.Ourschoolprogrammeswhichweconductperiodicallyineffectaimatchangingtheinvestmentperspectiveofthenextgeneration,leadinguptoeconomictransformationandprogressinthelong-term.

PRIvATE SECTOR INFRASTRUCTURERefer Management Discussion and Analysis, page : 42

Reinforcedbyourexpertiseinlarge-scaletransactions,wehaveestablishedanichetosupportprivatesectorinfrastructuredevelopmentprojects.Ourforteincapitalmarkets,capacitytobringconsortiumofinvestorstogethertoraiselargeamountsoffundsandthevastexperiencewebringthroughouradvisoryserviceshavesetasoundplatformtotake-offprivatesectorinfrastructureprojects.Thissupportsthecountrytobridgethegapininfrastructure,vitaltobackitsdevelopmentgoals.

Intheyearunderreviewasdiscussedinthe‘ManagementDiscussionandAnalysis’,NCAPinvestedasumofRs.730Mnaspartequitycontributionintheacquisitionofacorporatewithinthepowerandenergysector-ResusEnergyPLC.Ourinvestmentbankstructuredandmanagedthisdealandsupportedtheinvestorsinitsadvisorycapacity.NDBIBarrangeddebtfinancingforsomeofpartneringinvestors.OurengagementwiththisprojectisnotonlyexpectedtogivefirmreturnstotheGroup,butalsospursignificantvaluewithinthepowerandenergysector,withfar-reachingindirecteconomicbenefitsintheyearstocome.Thisinvestmentalsoreinforcesourdrivetowardsgreenenergy.

Wind Power - Pawan dhanavi


GRI - G4 / eC7


Bangladesh Power Plant - Investment Banking Client

Bangladesh Power Plant - Investment Banking Client

Giddawa Power Plant - Resus Energy PLC

Agra oya Power Plant - Resus Energy PLC

Inaddition,wealsosupportedinfrastructuredevelopmentwithintheregionthroughourengagementwithNDBCapitalBangladesh.Ourinvestmentbankingarm,NDBIBstructuredandmanagedasyndicatedloanofapproximatelyUSD50MnforapowerandenergyprojectinBangladesh,sponsoredbyacompanywithinthissectorinSriLanka.Ourinvolvementinthisinstanceisexpectedtosupportthelocalcompanyaswellasthelocalsyndicatepartners,throughwhich,indirectbenefitsareexpectedtotrickle-downtotheeconomy.Thisisoursecondengagementofasimilarpowerplantprojectwiththisclient.



PRODUCT RESPONSIBILITY

Beingattheforefrontofinvestmentbankinginthecountry,followingethicalpracticesinextendingproductsandserviceswithinthemarketplaceishighlywarranted.Ourproductofferdistributedthroughawell-linkedgroupnetworkincludingourparentisourforte;andtherefore,placingdueemphasisonresponsiblepracticesunderscoresthefutureprogressandviabilityoftheNCAPGroup.

THE APPROACHProductresponsibilityatNCAPreflectsthebestinbusinesspracticesandisapproachedpragmaticallytosuitdiverseclientsegments.Wehaveadoptedclearguidelinesandmeasurestoensurethatweextendfairandrightproductsolutions;delivertransactionswithpositiveimpactsontheenvironmentandsociety;andmaintainthehighestlevelofintegrityintermsofcustomerprivacyandsecurityofinformation.Weseektocomplyatalltimeswithlegalandregulatoryrequirementswhilstupholdingthevoluntarycodesandinternalprocessestosafeguardproductresponsibility.

COMPETENCY AND FAIR DEALINGSRefer: Ethics and Compliance Management and Human Capital, Pages: 90 - 97 and 84 - 89

Wehavewithusatalentedandwell-roundedteam,endowedwithmulti-disciplinaryskillsandvastexperiencewithinandoutsidetheindustry.Basedonourrelationship-centricapproach,ourteamseekstoengagecloselywithclientsandsupporttheirinvestmentneedswithabest-fittotheirrisk-returnprofiles.Theteamishighlyproficientandflexibletoextendstrategicadviceandstructuresolutionsforcorporatesincludingraisingcapitalonequityanddebtmarkets,mergersandacquisitions,andloansyndication;whilstdeliveringthemostfeasibleoptionsforhigh-net-worthindividualsandtheretailsegmentespeciallyintermsofwealthplanningandmanagement.

DuetrainingfortheteamasdiscussedundertheHumanCapitalsectiontoenhancetheirproductandmarketknowledgeisprioritised,inturn,empoweringthemtoreachouttoclientsofall

segmentswithappropriateadviceandinformation.TheCodeofConductasdiscussedunderEthicsandComplianceManagementclearlysetsouttheethicalconductalongwithallapplicablelaws,rulesandregulationsthatemployeesshouldfollowandcomply,tobeindependentandtransparentintheirdealings.TheCodewhichiswellinternalisedamongstemployeesthroughregulartrainingsetsoutstrictguidelinesonanti-moneylaundering,competitionandfairdealing,anti-bribery,anti-corruption,intellectualpropertyandmarketingintegrity.Inthereportingyear,weextendedarefreshertrainingfor24employeesonproductandmarketplaceresponsibilitythroughtrainingontheCodeofConductandfor52newrecruitsthroughanorientationprogramme.

Inthereportingyear,NCAPalongwithitsthreesubsidiariesdidnotrecordanyincidentsofnon-compliancewiththeCodeofConductintermsofproductresponsibility.

BUILDING FINANCIAL LITERACYWerecogniseourresponsibilitytoextenddetailedinformationtoclientsonourproductoffer,thus,enablingthemtomakeinformeddecisionsontheirinvestments.Theinformationwegiveseekstobuildtheirliteracylevelonfinancialproductswhilstouradvisoryserviceslayouttheoptionsavailabletomaximisereturnoninvestments,mitigaterelatedrisks,takeonalternativeproductsandbuildtieswithbusinesspartners.Wealsogivethemourfeestructureandancillarychargesupfront.Theclientmandates/agreementsholdcomprehensivelegalprovisions,informingclientsonthetermsandconditionsthatformthebasisofatransaction.

Weholdfrequentone-to-oneclientmeetingswherewetaketheopportunitytoeducateourclients.Wealsodisseminateproductandmarketinformationthroughprintmedia,road-showsandseminarsheldislandwideinkeylocationsincludingschools.Wehaveasetofbrochuresandleafletswithkeyinformation,particularlyforwealthmanagement,mutualfundsandstockbroking.TheofficialwebsitesoftheGroup,interactiveandinformative,alsofacilitatethedisseminationofinformation.OurresearchonmacroeconomicandcapitalmarkettrendsandanalysisonlistedcorporatesontheCSE,publishedinthreelanguages,seekstoempowerourclientsandthepublictomaketherightchoicesintheirinvestmentsandwealthplanning.

GRI - G4 / PR3 PR4


CLIENT PRIvACYRefer Ethics and Compliance Management, page : 95

Asaprincipledorganisation,werespectclientprivacyandplacehighestprioritytoconfidentialityofinformation.Wehavetakenthenecessaryprecautionstoensurethatclientidentityandpersonaldataandinformationareprotected.

ClientinformationishandledwithcareandisnotsharedwithexternalpartiesotherthanamongstthegroupcompaniesseekingtoofferabetterserviceandwithinstitutionswhicharedulyauthorisedtosupportthefunctionsoftheGroup.Thistooissubjecttoprioragreementwithclientsandevensuchinstitutionsareboundbylegalobligationtokeepinformationanddataconfidential.ClientinformationisalsosharedinthecaseofmandatesfromstatutoryandregulatorybodiesincludingtheCentralBankofSriLanka,SECofSriLanka,CSEandundertheForeignAccountTaxComplianceAct(FATCA)agreementwithinthepurviewoftheUSAlegislature.

AsdiscussedunderEthicsandCompliancesection,wehaveinplacethenecessarymeasuresintermsofinformationsecurity-wellsafeguardedwithasoundBusinessContinuityPlancomprisinganeffectivedisasterrecoverysystem.

Wealsohaveacomplainthandlingmechanismwhereclientscanreportonproductirresponsibility,anymisdeeds,violationsofbestpracticesandethics.Thismechanismenablesclientsandotherstakeholderstomakewrittencomplaints,anonymouslyorincompleteconfidencetoanombudsperson,theChairpersonofBoardAudit,RiskandComplianceCommittee.Uponacomplaint,theombudspersonaddressestheissuewithdueinvestigationsinatimelymannerandrecommendationsinresponsearetabledforBoardreview,deliberationsanddecisionsontherequiredaction.

Intheyearunderreview,theNCAPGroupdidnotrecordanysubstantiatedcomplaintsregardingbreachesofclientprivacy,lossofinformationanddata.

ENvIRONMENTAL AND SOCIAL CONSIDERATIONSTheNCAPGroupcloselyfollowsresponsiblebusinesspractices,formingafirmfoundationtowardssustainability.Weareconscientiousinextendingawell-thoughtoutproductandserviceoffer,ensuringthatourengagementiswiththoseclientswhoareinturnconsciousofsustainablebusinesspractices.Weareselectiveinourdecisionmakingprocess,inourtransactionsandinourrelationshipswithclients.Weseektoavoidinvolvementinprojectsthataredeemedrisky,sensitiveandobjectionablefromanenvironmentalandsocietalperspective.However,NCAPhasnotpledgedtheirallegiancetoanyeconomic,environmentalandsocialcharters/principals.

Wehaveestablishedastrongevaluationandapprovalprocesstoaddressenvironmentalandsocialrisksandnegativeimpactsandrecommendmitigation,iffeasible.Ourclientmandates/agreementsentailcomprehensiveprovisionsandcovenantstoaddresstheserisks-notonlyforinstitutionalclientsbutalsointhecaseofhigh-net-worthindividualsandretailsegment.Ourprivateequityfundwhichtook-offintheyearunderreviewhasafirmenvironmentalandsocialmanagementmechanismtoscreenselectedSMEsattheselectionstageandthereafter.

Inthereportingyear,wehaveevaluatedaround80SMEswiththetotalfundingrequirementofaboutRs.2.5Bninsectorscoveringmanufacturing,exports,ITservices,education,logistics,healthcare,construction,leisure,fastmovingconsumergoods(FMCG),energy,etc.Thesedealswereevaluatednotonlyonpurefinancialgroundsbutalsotobeinlinewithenvironmental,socialandgovernanceguidelinesspecifiedbyFundinvestors,especiallyDFIs.

GRI - G4/ G4 - 14 G4 - 15

EC7, PR8, PR9 Financial Services Sector FS1

& FS2 (Former)


SMEs Selection - Exclusion List for Private Equity Investment▪ Productionortradeinanyproductoractivitydeemed

illegalunderlawsandregulationsorinternationalconventionsandagreements,orsubjecttointernationalphaseoutsbans,suchashazardouspharmaceuticals,pesticides/herbicides,chemicals,ozonedepletingsubstances,PCBs,wildlifeorproductsregulatedundertheConventiononInternationalTradeinEndangeredSpecies(CITES)ofWildFaunaandFlora.

▪ Productionortradeinweaponsandammunitions▪ Productionortradeinalcoholicbeverages(excludingbeer

andwine)▪ Productionortradeintobacco▪ Gambling,casinosandequivalententerprises▪ Pornographyand/orprostitution▪ Racistand/oranti-democraticmedia▪ Productionortradeinradioactivematerials.Thisdoes

notapplytothepurchaseofmedicalequipment,qualitycontrol(measurement)equipmentandanyequipmentwhereIFCconsiderstheradioactivesourcetobetrivialand/oradequatelyshielded.

▪ Productionortradeinunbondedasbestosfibers.Thisdoesnotapplytopurchaseanduseofbondedasbestoscementsheetingwheretheasbestoscontentislessthan20%.

▪ Unsustainablefishingmethods(e.g.blastfishinganddriftnetfishinginthemarineenvironmentusingnetsinexcessof2.5km.inlength).

▪ Cross-bordertradeinwasteandwasteproducts,unlesscomplianttotheBaselConventionandtheunderlyingregulations

Additional Exclusions - SMEs▪ Productionoractivitiesinvolvingharmfulorexploitative

formsofforcedlabor/harmfulchildlabor▪ Commercialloggingoperationsforuseinprimarytropical

moistforest.▪ DestructionofHighConservationValueareas▪ Productionortradeinwoodorotherforestryproducts

otherthanfromsustainablymanagedforests.

Additional Exclusions - Microfinance▪ Productionoractivitiesinvolvingharmfulorexploitative

formsofforcedlabor/harmfulchildlabor▪ Production,trade,storage,ortransportofsignificant

volumesofhazardouschemicals,orcommercialscaleusageofhazardouschemicals.Hazardouschemicalsincludegasoline,kerosene,andotherpetroleumproducts.

▪ Productionoractivitiesthatimpingeonthelandsowned,orclaimedunderadjudication,byIndigenousPeoples(asdefinedinStandard7ofthePerformanceStandards),withoutfulldocumentedconsentofsuchpeoples.

COMPLIANCEWearecommittedtoupholdthehigheststandardsofethicalpracticesinextendingourproductsandservicestoclientsincludingclientsoutsideSriLanka’sjurisdiction.Inthereportingyear,NCAPandthesubsidiariesdidnotrecordanymonetaryfinesfornon-compliancewithlawsandregulationspertainingtoproductsandservices.


GRI - G4 / PR9


ENvIRONMENTAL INITIATIvES

Refer Product Responsibility, page : 81

Asaninvestmentbankingorganisation,thedirectimpactofouroperationsontheenvironmentisnotsignificant.Ourimpactontheenvironmentislargelyindirect-comingfromourengagementwithprojectsthatmayhaveadverseenvironmentalimplications.The‘ProductResponsibility’sectionwillshedlightonthemeasureswehaveadoptedtomitigatetheindirectimpactofourbusinessesontheenvironment.

Apartfromthesemeasures,weareconcernedandseektodoourpart,eventhesimplestmeasuresandpracticestobeenvironmentallyfriendlyinourday-to-dayoperations.Werelyontechnologicalimprovementstobemoreefficientinusingresourcesandlessreliantonpaper.WehavecreatedawarenessandmusteredthefullsupportofallemployeesacrosstheGroupfortheseinitiatives.

COMPLIANCEDuringtheyearunderreview,theNCAPGrouphasnotbeensubjecttoanyfinesandnon-monetarysanctionsfornon-compliancewithenvironmentallawsandregulationsinthecountry.

▪ Buildstaffawarenessatmeetingsanduseofsignagewithenvironmentalfriendlymessages

▪ E-mailsforcorrespondencebothinternalandexternal

▪ E-memosforsimpleapprovalsandformalcommunication,whereverfeasible

▪ Teleconferencing and video conferencingwithstrategicpartnersbasedabroad

▪ Double-sidedprintingandprintonlyifnecessarypolicy

▪ Cloud-basedsolutionstominimisetheuseofsoftwareandhardware

▪ Cloud-basedHRperformancemanagementsystem

our simple

eNviroNmeNtal iNitiatives

GRI - G4 / en29



HUMAN CAPITAL

Inarelationshipbasedindustryunderscoredbyspecialisationandexpertise,buildingastrongteamiscriticaltoreachouttotheorganisation’sstrategicgoalsandthereby,securingthepathtowardssustainability.Hence,wegivedueprecedencetoextendanenablingworkplacewhereouremployeescouldlearn,progress,berewardedandshapetheircareers.

THE APPROACHNCAP’sengagementwithemployeesispragmaticandprogressive.Followingcloselythebestindustrypractices,NDB,NCAPseekstobuildcareersforitsemployees,beyondmereemployment.TheapproachtoHRisbasedontheprincipleof‘equalopportunity’andweseektoofferanon-discriminativeworkplaceculturetoreaptheoptimumlevelofemployeemotivation,leadingtohigherproductivity,innovationanddedication.Wearefocusedinoureffortstorecruitthebestandtheright-profiledpeopleandretainthemwithattractiveremuneration,performancebasedincentives,tacticaltrainingopportunitiesforcareergrowthandmeasurestoensuretheirwellbeing.

HRmanagementisguidedbyNCAPastheholdingcompany,whilstthedaytodaymanagementandengagementarehandledbyindividualbusinesslines.

CADRE COMPOSITIONAsatreportingyear-end,NCAPGroup’scadretotalledto137employees,representinga17%increaseoverthepositionasatpreviousyear-end.

Thecompositionbroadlyreflectsagoodbalanceinkeepingwithan‘equalopportunity’workplace.Thereisafairmixbetweengenders,althoughbeingskewedtowardsmaleemployees.Overhalfofthecadreisemployedonapermanentbasis,givingtheorganisationgreaterstabilityforsustainable

operations.Theaverageageofaround30yearspointsouttothefactthereisastrongbaseofyoungerstaffmembers-opentonewideasandinnovationwhilsttheseniormanagementcorrespondingtoover15%ofthecadrebringsinmaturityandgreatersenseofbusinessacumentotheoperations.Over70%ofthecadreisdominatedbythemanagementandexecutivelevelmembers,demonstratingthestrongoperationalbasetocarryoutthecorporatestrategyandplans.

Theanalysisthatissetoutgraphicallyhereindemonstratesthecadrecompositionintermsofbusinesses,employeecategory,contracts,genderandethnicityforthereportingyear,

Cadre - Line of Business▪ NCAPtookup4%ofthetotalcadre▪ Subsidiariesabsorbed96%ofthetotalcadre

Cadre - Employee Contract▪ 64%ofthecadrewasemployedonapermanentbasis.

NCAP 4%

NDBWM 37%

NDBIB 19%

NDBZ 4%

NDBS 36%caDre - lINe of BuSINeSS

Permanent 64%

Contract 17%

Probation 19%caDre - emPloYee coNtract

GRI - G4 /G4 - 10


Cadre - Employee Category▪ Compositionofemployeecategoryreflectsastrong

operationalteam.

Cadre - Employee Gender▪ Althoughskewedtowardsmaleemployees,thereisafair

genderbalancewithfemaleemployeesrepresenting30%.

Cadre - Employee Ethnicity ▪ Minoritygroupswerewellrepresentedreflectingcadre

diversity

DIvERSITY AND EqUAL OPPORTUNITYBeinganethicalorganisation,nurturingdiversityandbuildinganinclusiveworkplaceisanaturalextensionofourcorporateethos.HRstrategy,relatedactionsandaspiredoutcomesarefoundedontheprincipleof‘equalopportunity’.Thiscommitmentalongwiththepracticesandprocessesinplaceopensupopportunitiestoallintermsofrecruitment,recognition,remuneration,rewardsandtraining-irrespectiveoftheirdifferencesintheirage,gender,ethnicityandanyothersocio-economicfacetthatcouldspurdiscrimination.OurCodeofConductclearlyguideseveryonefromtheBoardlevel,managementandtheirrespectiveteamstobeconsciousandrespectdiversityattheworkplaceandfosteracollaborativespiritaswillbediscussedinthelatterpartofthereview.

Ourcadreiswellrepresentedintermsofgenderandethnicityasreflectedinthegraphicalpresentationofthecadrecomposition.Theseniormanagementhasafairrepresentationoffemaleemployeeswithover30%oftheseniormanagementcadreand31%ofthetotalcadre.EvenourBoardisrepresentedbyanaccomplishedfemaleBoardmember,Ms.AruniRajakarier.BoardAuditRiskandComplianceCommitteeisinfactchairedbyherandshealsorepresentsRemunerationandInvestmentCommitteesoftheBoard.

RECRUITMENT

reCruitmeNt aNalysisNumBer %

Gender

Male 33 63%

Female 19 37%

Contract type

Permanent 16 31%

Contract 28 54%

Probation 8 15%

Total: 52

Senior Management Grade 17%

Management to Executive

Grade 64%

Support Staff 7%caDre - emPloYee cateGorY

Male 69%

Female 31%caDre - emPloYee GeNDer

Majority Group 77%

Minority Group 23%caDre - emPloYee ethNIcItY

GRI - G4 / LA 12 LA 1


Asaversatileinvestmentbankingoperation,wefullyrecognisethesignificanceofrecruitingthemosttalentedindividualstoourcadre.Ourstrategy,therefore,issteadfastinitsstanceofgiving‘equalopportunity’employmenttothosewhopossessrightskills,experienceandpersonalitytraitstosuitthevacanciesaspertherespectivejobdescriptions.Weseektobringinthebestundergraduatesfromournationaluniversitieswithamulti-disciplinarymixcoveringfinance,economics,marketing,engineeringandlaw-thus,supportingtheNCAPGrouptoreachouttodiverseandcomplexneedsofourstakeholders.

Wecontinuetofollowasoundrecruitmentprocessthatisstructured,competitive,transparentandimpartial-purelybasedonmerit.Wehaveaclearbasisforpreparingalong-listofcandidates,short-listingthroughaptitudetestsandchallenginginterviewswiththeseniormanagementandsubsequently,selectingthebestcandidatesinconsultationwiththeBoard.

Inthereportingyear,werecruited52employeestotheNCAPGroup,takingthetotalto137employees.Outofthenewrecruits,37%comprisedfemaleemployees;whilst31%wasabsorbedintothepermanentcadrewiththebalance69%takeninascontractstaffandonprobation.

Asideourexternalrecruitments,wegivepriorityandadvocateinternalrecruitments.Basedonourperformanceevaluationscheme,weareabletoearmarkpotentialemployeesforpromotionsandcross-placementswithinthenetworkandextendduetraining,mentoringandcoachingtobest-fitthenewjobresponsibilities.Inthereportingyear,wepromoted14employeesacrosscategoriesandcross-placedsevenwithintheGroup.

RetentIon

turNover aNalysisNumBer %

Gender

Male 23 77%

Female 07 23%

Contract type

Permanent 12 40%

Contract 07 23%

Probation 11 37%

Total: 30

Beingahighlyspecialisedorganisation,weunderstandtheimportanceofretainingourtalentwithintheNCAPGroup.Highturnovertoanorganisationsuchasoursisdetrimentalintermsoflossofknow-howandexperience,break-upinloyalrelationshipsandnetworkingtiesandmoreso,theimpactontheorganisation’smoraleandproductivity.Hence,retentionstrategiestakecentre-stagewithintheoverallHRstrategy.Wetakegreatefforttobeabest-in-classemployerasmentionedabove-extendingexcellentremunerationpackagesandrewardsbasedonperformance,developingskillsandguidingandenhancingcareersandensuringthewellbeingofemployees.

TheGroup’sretentionlevelfortheyearunderreviewwasalmost72%whilstouraveragestaffturnoverstoodat28%.Over60%ofthemovementintheyearcamefromemployeesfallingundercontractandprobation.Thekeyretentionstrategiesarediscussedindetailbelow.

MANAGEMENT DISCUSSION AND ANALYSIS / SUSTAINABILITY IN FOCUS (Contd.) GRI-G4 / LA 3

GRI - G4 / LA 12 LA 1


RemunerationRefer Economic value Creation, page : 77

WithaHRstrategythataimsatbuildinga‘best-in-class’team,itisextremelyimportantthatwemaintainafairandprogressiveremunerationstructure.Ineffect,remunerationwithintheNCAPGroupiswellinlinewiththeindustrynormsandinmostinstances,itstandsasthebenchmark.

Reiterating,wedonotentertainanyformofpartialitytogenderortoanyothersocio-economicfacet,ourremunerationpolicyispurelybasedonthelevelofproficiencyandperformancelinkedtothejobdescriptionsassignedtoeachemployee.Thus,wemaintainagoodbalanceinremunerationratiosbetweengenders.Femaleemployeesrepresent31%oftheemployeesintheGroupand27%ofthetotalsalarybillfor2014.Allsalaryincrementsandincentivesarebasedonourtransparentperformanceevaluationschemeaselaboratedintheensuingsection.Wealsomeetourdefinedbenefitobligationsasdiscussedunderthe‘EconomicValueCreation’section.

Performance EvaluationInkeepingwithourquestto‘buildcareers’forouremployees,weseektofollowcurrentandbestpracticesinperformanceevaluationswhichformthebasisforsalaryincrements,incentivesandbonuses,promotions,trainingopportunitiesandsuccessionplanning.

Ourevaluationscheme-structuredandtransparent,iscarriedoutannually.Employeesareevaluatedbasedonpre-agreedtargetsthatcascadesdownfromtheorganisationalgoalssetintheCorporatePlan.Theprocessisinteractiveandenablesbothemployeesandthemanagementtoopenlydiscussoncareerprospectsandanyothergrievancesthatwouldstandinthewayofmeetingtheirtargetsbothatanindividualandcollectivelevel.

Intheyearunderreview,weevaluated100employeesoutof117(March2014)withintheNCAPGroupwhichcorrespondedto85%.Outofthetotalevaluated,34%werefemaleemployeesacrossallcategories.Outof10membersofthesupportstaffgrades,07wereevaluatedfortheirperformance.

Succession PlanningOperatinginahighlyspecialisedindustry,successionplanningwarrantsahands-onapproachtoensurecontinuityofleadership.GuidedbytheBoardofDirectors,theseniormanagementisproactiveinidentifyingpotentialindividualsdisplayinghigherdegreeofcompetencyandpersonalitytraitsofmanagementskillsandleadership.Theselectedemployeesarethencarefullymentored-reinforcingtheirstrengthsandaddressingtheareaswheretheyareweak.Theperformanceevaluationschemediscussedaboveplaysacrucialroleinthisprocess-identifyingfutureleadersaswellassettingoutaneffectivementoringplanwithfocusedtrainingopportunitiesincludingforeigntrainingtogivethemconfidenceandexposuretocurrentinternationalbestpracticesinmanagementandleadership.Ourmanagementtraineeprogramme,attractingsomeofthebestundergraduatesinthecountryissuccessfulandrewarding.WecloselymonitortheeffectivenessofthisprocessthroughfeedbackandspecialisedassignmentswiththeengagementattheBoardlevel.Asattheyear-end,wehave12high-performerswhohavebeenearmarkedandmentoredbytheseniormanagement.

GRI-G4 / LA 13 LA 11

Evaluations - Male 66%

Evaluations - Female 34%PerformaNce evaluatIoNS


Career DevelopmentAmidstthedemandsoffarapidlychangingbusinesslandscape,developingourteamisrecognisedasthemostdecisivefacetwithinourorganisation.Ouraimistobuildanaccomplishedteamwithmulti-disciplinaryexpertise,resourcefulnessandagility.Ourtrainingiswelldeliberatedandfocused.Wehavewithusaversatilenetworkthatcanextendampleopportunitiestolearnandrefineskillsandlearning.On-the-jobtraining,staffrotationsandcross-placementsacrossthegrouphavepavedthewayforemployeestobeconversantandevenbeproficientinagamutoffieldsfrominvestmentbanking,wealthmanagement,mutualfunds,securitiestrading,privateequity,andretailbankingandcorporatefinancethroughourparent,NDB.OurtieswithstrategicpartnersincludingDBSBank,Singapore,multilateralfinancialinstitutionsandjointventurepartnerfromtheUSgiveasolidexposureforallemployees,advocatingcurrentandpre-eminentpracticesinfinancialmarketsglobally.

Apartfromourcomprehensivetrainingmechanismwithin

thenetwork,westructurecustomisedprogrammesinternallytoaddressspecifictrainingneeds,identifiedthroughtheperformanceevaluationscheme.Ourprogrammesrangefromtechnicaltosoftskills-negotiations,presentations,marketing,management,ICT,businessethicsandetiquette.Wealsoextendacomprehensiveinductionprogrammeforournewrecruitswithlearningandnetworkingopportunitiesacrossthegroup.

Theexternaltrainingprogrammesinclusiveofforeigntrainingarecarefullyplannedandselectedtoavailthemaximumbenefittodevelopemployeeswhilstenablingtomeettheorganisationalgoals.Wealsoguideandfinanciallysupportouremployeestopursuepost-graduatelevelstudiesandfurthertheirprofessionalcareers.

Duringthereportingyear,wetrainedemployeesfor1,738manhours.

key struCtureD traiNiNg programmes summary – 2014

traiNiNg programme employee Category traiNeD By NumBer traiNeD

maN-Hours traiNeD

AcceleratedManagementProgramme Management–ExecutiveStaff IndianSchoolofBusiness 1 168

CreditAnalysis Management–ExecutiveStaff NationalInstituteofBankManagement,Pune,India 1 50

MasteringFinancialModelling Management–ExecutiveStaff GoldmanCommunication 5 80

StrategicMergersandAcquisitions:Adisciplinedapproach Management–ExecutiveStaff EuromoneyTraining 1 24

AMLTraining AllNDBSstaff ComplianceDepartment 50 225

Collaborative CultureAtNCAP,weseektofosterandsupporta‘team’culturewherecollaborativeeffortsareappreciatedandencouraged.Withasimpleandaflatterorganisationstructure,theteamisempoweredtoworktogethertowardsmeetingcollectivegoals.Theyareencouragedtosharetheirlearning,skills,experienceandworkpracticesacrossthegroup,inspiringcreativityandinnovativeness,leadingtheorganisationtobeaheadofthe


competitionanddeliveroperationalexcellencewithintheinvestmentbankingdomaininthecountry.

EmployeeswithintheNCAPGrouparenotcoveredbyanycollectivebargainingagreements.

GRI-G4 / LA 9, LA 10, LA 2


nCAP Christmas Party 2014

Advocating Employee wellbeingWearecommittedtonurtureawell-balancedworkplaceandencourageouremployeestostrikeahealthyblendbetweenworkandlife.Inafast-pacedworld,thisassumesgreaterimportancetoensurethattheteamisnotover-worked,stressedandunhealthy,inturnerodingtheproductivitylevelsandcompromisingonthecorporategoals.

Wegiveouremployeesspaceandsupporttoplantheirtimeatworkwhilstembracingahealthylifestyle.OurinitiativesforourpermanentemployeesinthisregardcovercomprehensivehealthinsuranceincludingOPDandhospitalisationforemployeesandtheirimmediatefamily;gymnasiumfacilitiesatconcessionarymembershipratesandannualhealthcheck-upsatreputedhospitals.Wearealsoplanningtoofferanemployeeshareoptionschemeforthepermanentstaffwhichiscurrentlybeingdeveloped.

LABOUR LAwS AND HUMAN RIGHTSRefer Economic value Creation and Product Responsibility, pages : 77 and 81

TheNCAPGroupconformstoalllawsandregulationsgoverninglabourinSriLanka.TheNCAPGroupdoesnotengageindividualsbelowtheminimumageofemploymentasstipulatedbylegislature.Necessarymeasuresareinplacetoensurethatourrecruitmentprocesstakesheedoftheminimumageofemployment.Similarly,theGroupdoesnotresorttoanyformofforcedorcompulsorylabour.Dueremuneration,definedbenefitobligationsandincentivesaremetconscientiouslyandfairly.TheNCAPGroupdidnotrecordanyincidentofdiscriminationonaccountofanyformofsocio-economicprejudices.AllemployeesareencouragedtoreportanygrievancesrelatedtoworkplaceethicstotheOfficeofCompliancewhichhasastructuredmechanismtoredresssuchissues,evenresortingtoBoardintervention,ifdeemednecessary.

Whereverpossible,asdiscussedunderthe‘SupplierChain-EconomicValueCreation’and‘ProductResponsibility’sections,wedoseektoinfluenceoursuppliersandcustomerstoadoptandmaintainethicalbusinesspractices.

TheGroupdidnotreportonanyfinesmonetaryorotherwiseduetonon-compliancewithrulesandregulationsaspertheLabourLawsinSriLankaasatthebalancesheetdate.TheGroupalsodidnotreportanygrievancesrelatedtohumanrights.

GRI-G4 / HR 3, HR 5, HR 6, LA 2



ETHICS AND COMPLIANCE MANAGEMENT

Ourbusinessmodelunderscoredbyourvalues,policiesandcodeofconductisbuiltonintegrity,transparencyandaccountability.Weplacegreatemphasisinourdailyoperationstobeinlinewiththesevaluedtenets.Compliancemanagement,hence,takescentre-stagewithinourorganisation,upholdingourcorporateethosandensuringourcompliancetoapplicablelawsandregulations.

In2014,NCAPsoughttofurtherstrengthenthecompliancefunctionacrosstheGroup,buildingonthefoundationsetintheprecedingyear.Notwithstandingthedelisting,NCAPiscommittedtoupholdthehighestbusinessidealsandfollowgoodgovernancepractices,whereverfeasibleandapplicableasdulyprescribedbytheregulatoryandstatutorybodies.

APPLICABLE REGULATORY BODIESNCAPinthereportingyearcameundertheregulatorypurviewoftheCSEandtheSEC.Asasubsidiaryofalicensedcommercialbank,NCAPisalsorequiredtocomplywithcertainregulatoryprovisionsundertheBankingActandasstipulatedbytheCentralBankofSriLanka.

Afterde-listingfromtheCSEwitheffectfrom26thJanuary2015,NCAPisnolongerwithintheregulatorypurviewoftheCSE.However,theCompanycontinuestoberegulatedbytheSECasaLicensedUnderwriter.NDBWMcontinuestoberegulatedbytheSECwhilstNDBScontinuestoberegulatedbytheSECandCSE.

Asanintegratedfunction,complianceindependentlyassesses,monitorsandguidestheCompanyandthesubsidiaries,oncomplyingwithgoodgovernancepracticesincludingregulations,internalcontrolsandbusinessethics.NCAPhasadoptedgloballyrecognisedbestpracticesinlinewithmultinationalfinancialservicesorganisations,thereby,bringingaworld-classcompliancecultureintoNCAPGroup.

Adedicatedofficer-theGroupHeadofCompliance,independentfromoperationsandreportingdirectlytotheNCAPBoardthroughtheBoardAudit,RiskandComplianceCommitteeleadsthecompliancefunction,engagingandworkingcloselywiththerespectivecomplianceunits/officersofthesubsidiaries.

COMPLIANCE CHARTERGuidedbytheGroupHeadofComplianceandinconsultationwiththeBoardAudit,RiskandComplianceCommittee,we

our BusiNess etHiCs

▪ Weleadwithintegrity,honestyandconductour businessinaccordancewiththehighestethicalstandards

▪ Wecomplywithallapplicablelaws,rulesandregulations

▪ Ourclients’interestalwayscomesfirst

▪ WeareloyaltowardsourclientsandourCompany

▪ Wemaintainindependenceandobjectivityinour professionalactivities

▪ Wetakeaccountabilityforouractions

▪ Werespecttheconfidentialityofourclientsandthe informationwereceiveinthecourseofourbusiness

GRI-G4 / G4 - 56


soughtinthereportingyeartofurtherinternaliseandestablishthecompliancefunctionandprocessesacrossNCAPandthesubsidiaries.Draftedintheprecedingyear,ComplianceCharterwasfinalisedandwasformallyadoptedin2014,strengtheningtheeffectivenessofcompliancewithinNCAPGroup.

TheCharterdescribesthegovernancerolesandresponsibilitiesandoperationofcompliancemanagementwithinNCAPGroup.Itdefinesthescopeandtaskofthecompliancefunction,markingthecommitmentofNCAPGrouptointegrityinitsdaily

operations.TheChartersetsouttheobjective,risks,scope,structureandgovernance,reporting,dutiesandtasksofthecompliancefunction.

COMPLIANCE – INTERNAL REPORTING STRUCTUREGroupcompliancemanagementensuresthatcompliancereportingisindependentandisdoneaccurately,comprehensivelyandinatimelymanner.Compliancereportingiscarriedoutonaregularbasis-annually,quarterly,monthly,dailyandthroughincidentalreporting.

WealtH maNagemeNt

NDBWMCompliance

NCap BoarD

GroupComplianceAssessmentandDecisionMaking

HeaD of group CompliaNCe

IntegratedComplianceManagementandMonitoring

auDit risk aND CompliaNCe Committee

AssiststostrengthenthecompliancefunctionandmonitorsGroupComplianceProgramme

private equity

InternationalFinancialServicesLimited(Mauritiousbased)andHeadofGroupCompliance

seCurities traDiNg

NDBSCompliance

iNvestmeNt BaNkiNg

NDBIBCompliance



GROUP COMPLIANCE PROGRAMMEDrivingsustainabilityoftheorganisation,NCAPhaspavedacomprehensivecomplianceframework,encompassingbusinessethics,operationalandfinancialfacets,regulatoryandstatutoryrequirementsandICTgovernance.Withinthisframework,NCAPfollowsastringentcomplianceprogrammewhichisstructuredonintegrityandcoveringareasincludingpreventionofinsidertrading,anti-moneylaundering,suppressionofterroristsfinancingandmanagingconflictofinterest.Allcompliancepoliciesandproceduressetoutintheprogrammeincludingreportingandmonitoringseektocoveremployees,theboardofdirectors,theCompany,clients,servicesandthemarket.Allcomplianceobligationsarebackedbyrigorouscomplianceandimplementationprocedures.NCAP’scomplianceprogrammeensuresthattheNCAPGroupcomplieswithitsCodeofConduct,designedtoguideandsupporteverymemberofNCAPGrouptobecompliantandaccountable;alongwithcompliancetoallapplicablelaws,rulesandregulations,.Someofthepolicies,internalcontrolprocessesandreportingmechanismsarediscussedbelow.

GROUP CODE OF CONDUCTAdoptedintheprecedingyear,therevisedCodeofConductbringsaworldclasscomplianceculturetotheNCAPGroup.TheCodeofConductactsasthemaindocumentguidingtheethicalandprofessionalbehaviourofallemployeesacrosstheNCAPGroup.Theguidingprinciples,governingtheconductofbusinessissetuponthehighestethicalstandardsandseekstomeettheexpectationsofstakeholders.ItdemonstratesNCAP’scommitmenttoupholdcorporateresponsibilityandformsthebasisforallgrouppolicies,proceduresandguidelinesinrelationtoitsdealingswithallstakeholders.Itcoversbusinessethicsanditsresponsibilitytoclients,marketplace,company,shareholders,employees,communityandotherstakeholders.AllmembersofNCAPGroupareboundtofollowtheCodeunreservedlyinletterandspirit.ThecomplianceprogrammeseekstoensurethecontinuouscomplianceoftheCodebyallgroupmembersandholdthemaccountableforfailuresofcomplying.

NCAPGroupreceivedatotalof390compliancerelatedtrainingmanhoursintheyear2014.ThetrainingareascoveredtheCodeofConduct,compliancerelatedproceduresforeach

company,Anti-MoneyLaundering,SuppressionofTerroristFinancing,SuspiciousTransactionsReportingandCustomerDueDiligence.RepresentativesacrosstheGroupparticipatedincompliancerelatedtrainingprogrammesconductedbytheCentralBankCentreforBankingStudies,includingatrainingconductedbytheAustralianTransactionReportsandAnalysisCentre(AUSTRAC),specificallydesignedforstockbrokers.Inaddition,NCAPGroupHeadofComplianceandrespectivecomplianceofficersconductedstafftrainingandbriefingsessions.

GRI-G4 / G4 so3so4


respoNsiBility to self ▪ApplicationoftheCode▪CompliancewiththeCode▪ResponsibilityofEmployees▪ViolationsoftheCode▪ReportingViolationsoftheCode▪Confidentiality▪Non-Retaliation

ClieNts aND market plaCe ▪OurClientsandOurServicesandProducts▪InsiderTrading▪PersonalInvestmentActivities▪ConfidentialandProprietaryInformation▪Privacyofinformation▪PublicDisclosure▪EthicalBusinessPractices▪Anti-MoneyLaundering▪CompetitionandFairDealing▪Anti-Bribery,Anti-Corruption▪IntellectualPropertyofOther▪MarketingIntegrity

Colleagues▪DiversityandEqualEmploymentOpportunities▪Harassment▪WorkplaceSafety▪AlcoholandDrugfreeWorkplace

OFFICE OF COMPLIANCE OFFICER ▪ComplianceOfficer▪CodeAdministration▪Investigations▪DisciplineandCorrectiveAction▪Waiver▪WheretoLearnMore

CommuNity▪PoliticalActivitiesandContributions▪CommunityInvolvementandCharitableContributions▪EnvironmentalStewardship▪HumanRights

CompaNy aND sHareHolDers▪UseofCompanyAssets▪Physicalassetsandelectroniccommunication▪ProprietaryInformationandIntellectualProperty▪InsideInformation▪EmployeeInformationandPrivacy▪BooksandRecordKeeping▪ConflictofInterest▪PersonalRelationships▪PersonalInvestmentandOutsideBusiness/other Activities▪GiftsandEntertainment▪CorporateOpportunities▪ActingonbehalfoftheCompany▪CommunicatingResponsibly▪LeavingOurCompany

CoDe of CoNDuCt BroaD areas CovereD


ANTI-MONEY LAUNDERING AND SUPPRESSION OF TERRORIST FINANCING POLICYNCAPGroup,asaleadingfinancialservicesorganisationhascontinuouslystrivedtoenhanceitsanti-moneylaunderingandsuppressionofterroristfinancingframeworkinordertobringitselfintolinewiththerecentregulatorydevelopmentsandguidelines.Asaresult,theNCAPGroupadoptedacomprehensivePolicyonAnti-MoneyLaunderingandSuppressionofTerroristsFinancingwhichalsoappliestoallofitssubsidiaries.ThePolicycoversallapplicablelawsandregulationsincludingthedirectivesandguidelinesissuedbytheFinancialIntelligenceUnitoftheCentralBankofSriLanka.Inadditiontothelegislativeframework,thePolicysetsuptheprocessforcompliancewiththerelevantlawswhichincludesarigorousknowyourcustomer(KYC)andduediligenceprocesses,compliancetraining,auditandimplementation.PeriodictrainingsessionsareconductedtoeducatethestaffonAnti-MoneyLaundering,SuppressionofTerroristFinancing,CustomerDueDiligenceandSuspiciousTransactionsReporting.

Takingacuefromthelatestindustryissues,wealsoreviewedthepoliciesalignedtotherevisionsandnewguidelinessetbytheFinancialIntelligenceUnit.WehaveobtainedaccesstogloballyrecogniseddatabaseinorderscreendesignatedpersonassanctionedbySriLankaMinistryofDefenceandUNSecurityCouncil.AccesstosuchadatabasewillsupportasimplifiedandacceleratedCustomerDueDiligenceprocesswhilstenhancingtheKYCintelligenceoftheprocess.

COMPLIANCE MANUALSInthereportingyear,thecompliancemanualswerereviewedinlinewiththeapplicablerulesandregulationsandGroupCodeofConduct.NecessaryamendmentstothecompliancemanualsweredonetofurtherstrengthenthecomplianceprocessesofNCAPGroup.

PROCEDURE MANUALAspertherecommendationsoftheBoardAudit,RiskandComplianceCommittee,NCAPGroupobtainedservicesofareputedauditfirmtoreviewandcarryoutagapanalysis,todocumenttheproceduresandtointroduceintegrated

proceduremanualsfortheentireGroupwiththeexpectationofdefiningoursystematicapproachtoimplementingbusinessexpectations,plans,proceduresandensuringconsistency.Wearecurrentlyintheprocessofreviewingandfinalisingthedocuments.

GROUP RECORD MANAGEMENT POLICYNCAPGroupacknowledgesitsresponsibilitytopreserveinformationrelatingtobusinessactivities,litigation,audit,investigationandtoremainincompliancewithapplicablelaws.Inordertofulfilthegrowingdemandsofthestatutoryresponsibilitiestomaintainaccurateandsufficientrecordsaswelltoensureitsrecordsareadequatelypreservedandmaintained,NCAPGrouphasinplaceapolicyforrecordmanagement.ThisPolicyprovidesguidancetoemployeesontheeffectiverecordmanagementincludingcreation,management,access,retention,preservationanddisposal.

Currently,weareintheprocessofreviewingthispolicy.OncethePolicyisformallyadoptedandtheproceduresarefinalised,NCAPGroupwillmovetowardsacomputer/technologyaidedrecordmanagementsystem,whichwouldfurtherassistrecordmanagementeffortsofNCAPGroup.

EMPLOYEE SECURITIES TRADING POLICYNCAPmaintainsatalltimestheconfidentialityofanyinsideinformationthatweholdregardingourclients,theirbusinessorourownGroupanditsbusiness.

OurcompliancealsogivesprecedencetoEmployeeSecuritiesTradingPolicyasprescribedbytheCSEandSECtoavoidanyconflictofinterestandinsiderdealingtransactions.Priorcomplianceapprovalisrequiredforemployeestotradesecurities.Necessarysafeguardsviz.updated“greyandrestricted”securitieslist,black-outperiods,regulardisclosuresandemployeedeclarationsareinplaceandimplementedtoensurecompliancetothispolicy.Inaddition,ChinesewallsandpoliciesrelatingtopersonalinvestmentpoliciesareincludedintheCompany’scompliancemanualandstrictsupervisionandmonitoringareinplace.Inthereportingyear,NCAPandthesubsidiarieshavefullycompliedwiththispolicy.


GRI-G4 / G4 so7


INFORMATION TECHNOLOGY (IT) COMPLIANCENCAPGroupunderstandstheincreaseddemandforfasterandadvancedtechnologyforimprovingitsservicesanddelivery.Asaresult,theGrouphasacquiredadvancedsystemswhichineffectensuretheGroup’scomplianceinmanyareas.

ITisanintegralpartandcrucialtoouroperationsanddeliveryofservice,moresoinwealthmanagementandsecuritiestradingbusinesses.NCAPGroup,uponidentificationofitsrelianceonITinfrastructureanduncertaintiesintheexternalenvironmenthasdevelopedabusinesscontinuityplanwithpoliciesonrecordkeeping,hardwareandsoftwareincludingemailandinternetpolicies.Thebusinesscontinuityplanalsoencompassesacomprehensivedisasterrecoverysystemwhichwillsafeguardbusinessesfromlossofinformationandbreak-downofITsystems.ITsystemsareperiodicallytestedfortheireffectivenessbycarryingoutSystemAuditsandthestaffisprovidedwithadequatetrainingonaregularbasis.

wHISTLEBLOwER POLICYIfemployeesareawareofanyexistingorpotentialviolationofvalues,CodeofConduct,lawsoranycompanypolicy,theycanreporttheirconcernstoGroup’sOfficeofCompliance.NCAPgivesprioritytoconfidentialityandensuresthatidentityofthereporterisprotected.TheCompanyvaluesclearandopencommunicationsandrespectemployee’scontributioninsafeguardingtheintegrityofitsbusiness.TheCompanyunderitsNon-RetaliationPolicyprovidestheopportunityforemployeestoraiseconcernsandreportviolationswithoutfearofretaliation.

NCAPalsohasanOmbudspersonunderitsCodeofConduct.TheChairpersonoftheAudit,RiskandComplianceCommitteeoftheCompanyactsastheOmbudspersonandfunctionsinaccordancewiththehighestethicalstandardsincludingindependence,neutrality,impartiality,andconfidentiality.EmployeescanreachtotheOmbudspersonwhentheywantaneutralprofessionalwhohasextensiveknowledgeofthepoliciesoftheCompanybeforemakingaformalstepsuchascomplainingtotheHRDivisionortheComplianceOfficer.TheservicesoftheOmbudspersoncanbeobtainedifacomplainantbelievesthatthecomplaintwasnotdealtwithappropriatelyor

satisfactorily.OmbudspersonprovidesrecommendationtotheBoarduponinvestigatingsuchconcernsorcomplaints.

Inthereportingperiod,theOmbudspersonhasnotreceivedanycomplaintspertainingtocorruptionandmalpractices.

COMPLIANCE MONITORINGRefer Risk Management, Report of Board Audit, Risk and Compliance Committee, Pages : 98 - 102 and 134

CompliaNCe moNitoriNg

RegulatoryBodies

NDBBankIntegratedRiskManagementCommittee

HeadofCompliance-NCAPGroup

ExternalAudit

Audit,RiskandComplianceBoardSubCommittee

SubsidiaryComplianceUnits/Officers

SystemCompliance

ThirdPartyAudits-Clients

GRI-G4 / G4 so5


CompliancemonitoringisoneofthekeycomponentsoftheGroupcomplianceprogrammeentailingasystematicmonitoringprocessforthispurpose.Thisalsoincludesadvisingonmitigationofidentifiedcompliancerisks,designingandimplementingpropercontrolmeasuresandtakingappropriatecorrectiveactionsandguidelinesonhowtoavoidordealwithsimilarsituationsinthefuture.

TheBoardAudit,RiskandComplianceCommitteeoverseesthecomplianceandmonitoringprocessofNCAPGroup.Anynon-complianceeventsandextraordinaryitemsarereportedtotheNDBIntegratedRiskManagementCommitteeonaquarterlybasis.TheGroupComplianceleadsthemonitoringprocesswithindependentonsiteandoffsitemonitoringwithperiodicreportingtotheBoardAudit,RiskandComplianceCommittee.TheGroupComplianceisassistedbytheComplianceUnits/Officerssetupateachofthesubsidiarycompany.Inaddition,thereareperiodiccomplianceauditscarriedoutbytheregulatoryauthorities,NDBandclientsandtrusteesforWealthManagement.

Board Audit Risk and Compliance CommitteeTheBoardAuditRiskandComplianceCommitteereviewstheadequacyofcontrolsestablishedtoensurecompliancewithlawsandregulations,policiesandprocedures,CodeofConductandbusinessobjectivesinaccordancewithitsCharter.

ThemonitoringprocessismainlycarriedoutunderthecategoriesofRegulatoryCompliance,StatutoryPaymentsCompliance,InvestmentCompliance,andInternalCompliance.

(a) Regulatory ComplianceI) TheOfficeofCompliancemonitorsNCAPGroup’s

compliancewithapplicablelawsandregulationsincludingthecompliancewithCompaniesAct,theSECAct,labourlaws,regulatorysubmissionsanddisclosures,anti-moneylaunderingcomplianceincludingrecordmanagement,regulatorycapitaladequacyandotherregulatoryrequirementsundertheapplicablelawsandregulations

II) FATCACompliance,reinforcingitscommitmenttoresponsiblefinance,NDBSandNDBWMhasregisteredwithInlandRevenueServicesoftheUnitedStatesofAmerica(U.S.)tocomplywiththereportingobligationsimposedbytheForeignAccountTaxComplianceAct(FATCA),alawthataimstoreducetaxevasionbyU.S.persons.NDBSandNDBWMwillfacilitatethenecessaryprocessestoreportonthefinancialaccountsandtransactionscarriedoutbyclientsthatqualifyasU.S.personsasperFATCA.BeingFATCAcompliant,enablestherespectivecompaniestobothretainandattractforeigninvestors.

(b) Statutory Payments ComplianceUnderthiscategory,theOfficeofCompliancemonitorswhetherNCAPGrouphasmadetherelevantstatutorypaymentssuchastaxes,EPF,ETFandotheremployeebenefitspaymentsinatimelymanner

(c) Investment ComplianceSomeofthecompaniesunderNCAPGrouparesubjecttorulesofregulatorswhenitcomestoclients’fundsinvestments.Inadditiontothat,thereareinternalinvestmentpoliciesapplicabletoallsubsidiariesofNCAP.MonitoringunderInvestmentComplianceensuresthattheGroupmakesitsinvestmentsinaccordancewiththeapplicablelaws,clients’mandates,internalinvestmentguidelinesandincompliancewiththepoliciesrelatingtoconflictofinterest.

(d) Internal ComplianceTheadherenceofthememberstoNCAPGroup’sCodeofConduct,lawsandthepoliciesandproceduresoftheCompanyaremonitoredunderInternalCompliance.Compliancewithemployeepersonalinvestmentpolicy,confidentialityrequirements,conflictofinterest,giftpolicies,businesstransactionsrelatedcompliance,directors’complianceandcompany’scompliancewithpoliciessuchasSoftwarePolicyismonitoredandreportedunderthiscategory.



COMPLIANCE REvIEw AND AUDITSTheHeadofComplianceofNCAPreviewsandconductsperiodicreviewsandcomplianceaudits(onsite/offsite)toassesscompliancewithandtheeffectivenessoftheComplianceProgrammeandtoassurethattheComplianceProgrammeisfunctioningasdesignedwiththeguidanceoftheBoardAudit,RiskandComplianceCommittee.TheseComplianceauditsassesswhetherthecompaniesintheGroupcomplywithapplicablelawsandinternalpoliciesandprocedures,whetherthepoliciesandproceduresareadequateandoperatedeffectivelythroughouttheperiod.TheendresultistabledtotheBoardwithfindingsandchangesrequiredandrecommendationsareimplementedwiththeapprovaloftheBoard.

COMPLIANCE STATUS 2014Intheyearunderreview,NCAPalongwiththreesubsidiariesNDBIB,NDBWMandNDBSwereassessedandmonitoredoncompliancerelatedrisksandthenecessaryrecommendationsweredulydocumentedandaddressedinconsultationwiththeBoardAudit,RiskandComplianceCommitteeandthefinalrecommendationsweretabledforBoard’sdeliberations.

NCAPalongwithitsthreesubsidiarycompanieswerenotsubjectinthereportingyeartoanyfinesornon-monetarysanctionsforlegalandregulatorynon-compliance.

GRI-G4 / G4 so8



RISK MANAGEMENT

OvERvIEwWearewellawareoftheneedtoembraceaneffectiveriskmanagementprocesswhichassumesgreatersignificanceinensuringthesustainabilityofourGroupintoday’sbusinesscontext.Hence,weatNCAPasagroupinvolvedindiversefund-basedandfee-basedbusinessactivitiessuchasinvesting,underwriting,proprietarytrading,fundraising,corporateadvisory,stockbroking,wealthmanagementandprivateequitygiveprecedencetoriskmanagement.Wefirmlybelievethatitisourfiduciaryresponsibilitytowardsourstakeholderstoensurethatourstrategyissustainablyexecutedwithinaprudentriskmanagementframework.

RISK MANAGEMENT STRUCTURETheNCAPGroupisguidedbythebestpractisesoftheintegratedriskmanagementprocessoftheparent,NDBBANKwhich

followstheguidelinesofBASELIIandworkingtowardsBASELIIIrequirements.NDBGroupRiskDepartmentunderthepurviewoftheBank’sIntegratedRiskManagementCommittee(IRMC)andNCAPBoardAudit,RiskandComplianceCommitteecloselyworkswiththeNCAPGrouponriskmanagementandensuresthatthehigheststandardsaremaintainedwithinthisprocess.EachbusinesslineintheGrouphasdevelopedandfollowsitsownriskmanagementframeworkandpoliciestomanageandmitigatetheexposurestodifferenttypesofriskswithinriskappetitesoftheirrespectivebusinesses.

Giventhecomplexityanddynamismofthefinancialmarketstoday,weregularlyreviewandrevisetheriskmanagementpoliciesandprocessoftheNCAPGroup.EachsubsidiarycompanyregularlymonitorsthevariedrisksimpactingtheirbusinesseswhicharereportedtotheGroupRisk,respectiveboardsandtotheNCAPBoardAudit,RiskandComplianceCommitteeonaregularbasis.

NCap BoarD

AssessesNCAP’sriskstatusalignedtotheBank’sstrategy

regulatory autHorities

Independentaudits

NDB iNterNal auDit

IndependentauditoftheinternalprocessesofNCAP

Group

NDB group risk

Monitorsriskprocesses,assistsandguidesNCAPGrouptoformulateriskmitigatorymeasuresandreportsrisk

statustotheNDBBoard,IRMCandNCAPBoard

NCap BoarD auDit, risk aND CompliaNCe

CommitteeAssists,guidesandmonitorsGroup’sriskmanagement

processalignedtocorporatestrategyandoverallrisk

appetite

iNvestiNg

NCAPandSubsidiaries

fee BaseD iNvestmeNt BaNkiNg

NDBIB

seCurities traDiNg

NDBS

WealtH maNagemeNt

NDBWM

private equity

NDBZ


THE APPROACH Ourriskmanagementprocessincludesidentificationofrisks,assessment,managementandcontrol,reportingandmonitoring to ensure that the checks and balances are optimallyexecuted.Duringtheyearunderreview,wefurtherstrengthenedthisprocessinconsultationwiththeNCAPBoardAudit,RiskandComplianceCommitteetobemorepracticalinmanagingrisksthatwouldsupportourbusinessestobalancerisk-returnsefficientlywithinourriskappetiteinthedecisionmakingprocess.Towardsthisend,weimplemented‘riskdash-boards’foreachsubsidiaryaswellasforNCAPwhichclearlysetouttheprincipalandsubriskcategories,impactandprobabilityofoccurrence.Basedonthis,eachprincipalriskisratedwhichwillenabletheoperationalunitstotakethenecessarymeasuresandprioritisetheiractionstomitigatesuchrisksaccordingtotheratingsfromhightolow.

RISK MANAGEMENT - BUSINESS LINESAdetaileddiscussiononthekeyriskfactorsaffectingindividualbusinesslinesoftheNCAPGrouptogetherwithriskmanagementandmitigationstrategiesarepresentedbelow.

Investing - NCAP and SubsidiariesOurinvestmentexposuresincludelistedequities,privateequity,fixedincomesecurities(corporatepapers,governmentsecurities,repos,securitisations,etc.)andunittrusts.Theinvestmentsaremadeinthelong-term,mediumtermandshort-terminstrumentsandincludetheinvestmentsmadebyNCAPandsubsidiaries.Theinvestmentsofsubsidiariesarelimitedtotheirstatedcapitalandreserves.Tooptimiseefficiencyandreturns,mostoften,NCAPanditssubsidiariesstrategicallycollaboratetostructureandmakeinvestmentstoensuretheanticipatedreturns.Thekeyrisksinvolvedwiththeseinvestmentsaremarketrisk,interestraterisk,creditrisk,liquidityriskandreinvestmentrisk.

Asariskmanagementstrategy,allinvestmentsaresubjecttoanassetallocationpolicywhichprovidesforadequatelevelofdiversification.Thediversificationismonitoredandmanagedwithineachassetclassaswell.TheassetallocationpolicyisregularlyreviewedbytheInvestmentCommitteeandNCAPandthesubsidiaryBoards.

risk DasH-BoarDs priNCipal aND suB risk Categories

strategiC risk▪NewBusiness▪Concentration

fiNaNCial risk▪Bankruptcy▪Liquidity

iNvestmeNt risk▪Default▪Market▪Liquidity▪Exit▪Currency▪Performance▪Legal

operatioNal risk▪Compliance▪Process▪Fraud▪Reputational▪SystemFailure▪BusinessContinuity▪Legal

HumaN resourCes risk▪KeyPersonDependency▪SuccessionPlanning

exterNal risk▪Macroeconomic▪CapitalMarket▪Political▪Competition



Themarketriskmainlyinvolvesthevolatilitiesexperiencedindebtandequitymarkets.Suchvolatilitiesaredrivenbymacroeconomicvariablessuchasinterestrates,exchangerates,inflationandcertainindustryspecificfactorstogetherwithsystematicrisksincludingcreditrisk.Thesevolatilitiescanalsobedrivenbyinvestorsentiment.

Theinvestmentsaremanagedbyateamofcompetentinvestmentprofessionalswhohavespecialisedinspecificareas.Thespecificinvestmentsthatinvolveprivateequityandprojectfinancingaresubjecttoacomprehensiveinvestmentappraisalandduediligenceprocess.Further,suchinvestmentsgothroughatieredapprovalprocesswithfinalapprovalbeinggrantedbytheInvestmentCommitteeandtheNCAPBoard.ThestatusofinvestmentsandtheprocessarealsoreviewedregularlybytheInvestmentCommitteeandtheNCAPBoard.

Fee-based Investment Banking - NDBIBAsafee-basedoperation,thisinvolvestheprovisionofadvisoryservicesandarrangingfinancingforclients.Fundraisingmandatesareundertakenstrictlyona‘bestefforts’basisandarelegallyvettedbyreputedlegalfirmsinthecountry.Anyfailuretoraisefinancingwouldadverselyaffectthereputationofthecompanyalthoughthefinancialpositionwillremainintact.Therefore,feebasedinvestmentbankingactivitiesaremainlysubjecttoreputationalrisk.Inaddition,theinvestmentbankingperformanceisdependentonthemarketconditionsandtheabilitytoretainkeypersonnel.

Inordertominimisethereputationrisk,NDBIBconductsathoroughmarketsurveypriortoenteringintofundraisingmandatestogaugetheappetiteofpotentialinvestors.Further,muchtimeandeffortarespentonclientpreparationstagetomakeprojectsbankablebystrengtheningtheproject/financialstructureandotherkeyaspects.Thereceivingofamandatebyaclientistakenasaseriousresponsibility.

Asaresultoftheseriskmanagementmeasures,NDBIBhasmaintainedanunblemishedtrackrecordindelivery.

TheeconomicandpoliticalconditionsofthecountryandglobalfactorsdirectlyaffectthedealpipelineofNDBIBwhichinturnimpactsthebusinessperformance.Asaresult,feebased

investmentbankingbusinessmayhavefluctuatingbusinessresultswhereanextremelygoodyearmaybefollowedbyaveryordinaryyear.Tomanagethisrisk,NDBIBhasestablisheditselfstronglyinbothdebtandequitycapitalmarketswhichgenerallyhaveaninverserelationship.Further,wehavesuccessfullyestablishedourselvesasoneoftheleadingmergersandacquisitionhouseinthecountrythatwouldprovidebetterbusinessopportunitiesinaneconomicdownturn.

Theretentionofhighperformingprofessionalsisgivenpriority.Astrongcultureisinculcatedwhereorganisationalvaluesactasacohesiveforcetoretainkeypersonnelwheremonetarybenefitsarenotthesoleconsideration.Inaddition,aperformancebasedincentiveschemeisinplacetoensuregoalcongruencebetweentheCompanyanditsstaff.Aclearsuccessionplanhasbeendevelopedbothatmiddleandseniormanagerialleveltominimisethedependenceonkeypersonnel.

NDBIBhasacomprehensiveinternalcomplianceprocesswhichisonparwithglobalbestpracticescoveringallcriticalareassuchascorporategovernance,personalinvestmentsbystaff,giftpolicy,conflictofinterest,dealingwithconfidentialinformation,storageofdocuments,softwarepolicy,KnowYourCustomerrequirement,anti-moneylaunderingpolicyandfinancialtransactionreportingrequirements.Eachmandategoesthroughatwotiercomplianceprocessatpreandpostmandatestages.

Stockbroking and Debt Securities Trading - NDBSTheroleofasecuritiesfirmistofacilitatetradinginthestockexchangeforacommission.Inaddition,othersupportservicessuchasonline-tradingandresearchadviceareprovidedtotheclient.ThemarginloanfacilitiesareextendedthroughNDBBank.Therefore,NDBSdoesnotdirectlytakeanyexposuretothestockmarket.However,NDBStakesthecreditriskofclientsforbuy-sidetransactions.Othermajorrisksinvolvedwithstockbrokingoperationsarecredit/settlementrisk,operationalrisk,complianceandregulatoryriskandliquidityrisk.

NDBSisexposedtocreditsettlementriskswherebyclientsfailtohonourtheirsettlementpaymentstothefirmwithinthespecifiedperiod.Inordertomitigatethecreditrisk,theCSEandSECofSriLankahavestipulatedrulesandregulationspertainingtoextendingcredittoclients.Accordingly,NDBShas


appointedacommitteeheadedbytheCEOandtheComplianceOfficertoreviewcreditrequests.Basedonthisevaluation,creditwillbeextendedtoclients.Portfolioexposurelimitsandcashmarginsareimposedbytheregulatortomitigatethecreditrisksarisingfrommarketfluctuations.Theseexposurelimits,bothclient-wiseandportfolio-wisearecontinuouslymonitoredinordertominimisetheimpact.Adebtorcontrolsystemisinplacewheresettlementobligationsofclientsarecloselymonitoredandactionistakenonacontinuousbasistomonitorsuchrisks.Asoundrelationshipismaintainedbetweenclients and investment advisors to facilitate the monitoring process.However,itshouldbenotedthatthecreditexposuresarebackedbyrelativelyliquidassetswhichcanbeconvertedtocashwithinafewdays.PlansareunderwayattheCSEtomitigatethesettlementriskfurtherbymovingintoaDeliveryVersesPayment(DVP)mechanism.

NDBSisfurtherexposedtooperationalrisks,namely,errortrades/dataentryrisk,fraudrisk,systemfailureriskandbusinesscontinuityrisk.Atradingmonitoringmechanismisinplacetomitigatetheserisks.Thisincludessettingupoftradinglimits,collectionofmargins,maintainingexposurelevelsetc.Advisorsandclientshavebeenallocatedtradinglimitsdependingontheclient’sriskprofileandadvisor’sexperience.Additionally,ITinfrastructurehasbeendevelopedtominimisedelaysandsystemfailures.TheemployeesarewelltrainedandITsystemshavebeenstructuredinordertoensuresmoothfunctioningwithadequateback-upfacilitiesinplace.Inordertomanagethesettlementrisk,certainprocesses,proceduresandregulationsareinplacebytheCSE.

Inordertominimiseoperationalrisks,allproceduresandprocessesaredocumentedandtheseniormanagementreviewsandevaluatesthebusinessprocessesandcontinuouslyimprovetheexistingcontrolstomitigaterisks.Theintegrityandthereliabilityofthedataprocessingfacilitiesandthesuitabilityandeffectivenessofthesystemofinternalcontrolsarereviewedfromtimetotime.

NDBSisrequiredtocomplywiththerulesandregulationsimplementedbytheSECofSriLanka,CSEandtheCentralDepositorySystem.Regulatoryrisksincludefailingtomeetthenetcapital,anyviolationsofanti-moneylaunderingrules

andanymarketmanipulativetradingpatternsofmarketprofessionalsetc.TheComplianceOfficerofNDBSisresponsibleformonitoringtheregulatoryriskandcontinuouslymonitorsthenetcapitalofNDBSandimplementsproactivemeasurestorectifyanypossibleshortfalls.Further,theComplianceOfficerhasimplementedanti-moneylaunderingandsuppressionofterroristfinancingpolicieswithinthefirm.MarketprofessionalsaregivenacomprehensivetrainingtoavoidanymarketmanipulativetransactionsandregularlyparticipateincontinuousprofessionaldevelopmentprogrammesconductedbytheCSEandSECofSriLanka.Tofurtherstrengthenregulatorycomplianceandmitigateanyregulatoryrisk,NDBShasimplementedaCompliancePolicy/CodeofConductinconsultationwiththeOfficeofComplianceatNCAPwhichsetsoutthestandardsofethicalandprofessionalconductthatallemployeeshavetoconformto.

NDBShasinplaceasophisticatedITsystemwhichcomplementstheriskmanagementframework.ThebackofficeinfrastructurehasenabledthesettingupofaneffectiveMISsystemtocatertotheexpectedbusinessgrowthandindustryrequirements.NDBShastomeetliquidityrequirementssetbytheCSEthatstipulatenetcapitalrequirementstocovertheserisks.Processesareinplacebywayoffilingreturnstomonitorcompliancewiththisrequirement.NDBShasadailymonitoringmechanismtoensurecomplianceandmanagessuchrisksbymaintainingadequatereservesandbankingfacilities.

wealth Management - NDBwMThisisastrictlyfeebasedoperationinvolvingdiscretionaryportfoliomanagement,privatewealthmanagementandmanagingmutualfunds.Asperthemandatesenteredintowiththeclients,allrisksandrewardsoftheassetsundermanagementarewiththeclient,insulatingNDBWMfromanyinvestmentrisk.Therefore,NDBWMisexposedtoreputational,operational,regulatoryandcompliancerisksinmanaginginvestments.

NDBWMhasbuiltacompetentinvestmentteamtomanagebothdebtandequityinvestments.Theinvestmentteamconsistsofqualifiedinvestmentprofessionalswithyearsofindustryexperience.Thenecessaryinformationrequiredforinvestmentdecisionmakingisprovidedbytheinternalresearchunit.TheInvestmentCommitteeandtheNDBWMBoardreviewthe



overallinvestmentstrategyadoptedbyfundmanagers.TheabovemeasureshaveenabledNDBWMtomaintainsatisfactoryinvestmentperformanceinturnsupportingtomanagethereputationrisk.

NDBWMhasdevelopedrobustinternalcontrolsandsystemstomanageoperational,regulatoryandcompliancerisks.Internalcontrolsareinplacewithregardtomisappropriationbysegregationoffunctionswithoutoverlappingroles.Theinvestmentmanagershavenoroleininvestmentadministrationandalltradesareprocessedandsettledbytheadministrationunitandthefundmanagers’roleendswithplacementofdealsandtheirentryintothesystem.Allordermatchingandsettlementsaredonebythebackoffice.NDBWMhasacomprehensiveITsystemfromanindustrypreferredglobalsoftwarefirmtosupportitsoperationswithallbuilt-incontrolmeasuresandriskmitigatingactions.Inordertomitigateoperationalriskbyinfrastructurefailureanddisasters,NDBWMhasafullyfunctioningdisasterrecoverysystemhousedoutsidethecompanypremises.ThewealthmanagementoperationhasbeensubjecttoperiodicprocessandinternalauditsbymultinationalorganisationsandNDBBank.Further,SECofSriLankacarriesoutitsownaudits.

NCAPBoardAudit,RiskandComplianceCommitteeregularlyreviewsinvestmentperformanceandriskexposuresandmandateviolations,etc.TheinvestmentpolicydocumentapprovedbytheBoardsetsouttheriskappetiteofNDBWMand details out the risk control measures that should be in place.Further,stepsaretakentosegregatefunctionswithoutoverlappingroles.

Private Equity - NDBZNDBZacompany60%ownedbyNCAPandbasedinMauritius,isinthebusinessofmanagingprivateequityfundsandcurrentlymanagestheEmeraldSriLankaFundI,thelargestprivateequityfunddedicatedtoSriLanka.TheFundwillbeinvestinginequityorequityrelatedsecuritiesingrowthorientedorganisationsinSriLanka.Apartfromprovidingmuchneededcapitalfortheorganisations,theinvestmentteamwillprovideguidancetoportfoliocompaniesinareasofstrategy,financeandmanagementdevelopmentinordertoenhancethevalueofthecompanies.

Thecompanyisexposedtoreputational,investment,operational,regulatoryandcompliancerisksinmanaginginvestments.

NDBZ’sinvestmentphilosophywillinvolveactiveparticipationinthemanagementofinvesteecompaniestoimproveformulationandexecutionofcompany’sstrategy.NDBZ’sglobalnetworkandrelationshipsareexpectedtopositiontheFundasanattractivepartnerforSriLankanbusinesseslookingtoexpandintooverseasmarkets.NDBZ’sinvestmentteamandsenioradvisorshaveseveraldecadesofexperienceinbuildingandmanagingcompanies.AllinvestmentsshouldbeapprovedbytheManagementCommitteeandInvestmentCommitteecomprisingofindustryveterans.TheManagementCommitteewillbeactivelyinvolvedinguidingtheinvestmentteamduringallphasesoftheinvestmentprocess.CarefulselectionofinvestmentthroughindustryexpertiseofseniormanagersisexpectedtocoverreputationalriskofNDBZ.

Theteamtakesallpossiblemeasurestomanageriskinaninvestmentthroughcarefulduediligenceconductedbywayofworkingwithqualifiedserviceproviderssuchasaccounting,audit,taxandlegalconsultants.Furthermore,priortothefunddisbursement,theteamworkscloselywiththecompanytodevelopajointbusinessplan,whichfurtherenhancestheteam’sunderstandingaboutthebusiness.Therefore,thesemeasuresareexpectedtocoverinvestmentandoperationalrisk.

Apartfromstringentinternalcontrols,EmeraldFundisexpectedtocomplywiththeinvestmentguidelinessetbytheDevelopmentFinanceInstitutes(DFIs)whoaretheinvestorsofEmeraldSriLankaFund1.TheFundiscommittedtoidentify,analyseandmanageenvironmentalandsocialimpactsandrisksonaprojectbyprojectbasisandmaintaincompliancewithallenvironmentalandsocialrequirementsinaccordancewiththerequirementsoflocalregulationsandotherstandardsestablishedbyDFIssuchasIFC,DEGandFMO.AnEnvironmentalandSocialDueDiligence(“ESDD”)isanintegralpartoftheFund’sinvestmentprocessandtheFundwillapplytheenvironmentalandsocialriskmanagementprocedurestoallitsinvestments.

Retentionoftalentedstaffisalsoacriticalsuccessfactorinprivateequitymanagement.Performancebasedincentiveschemeswouldbeimplementedtorewardandretaintalentedstaffwithintheorganisation.

GRI-G4 / FS - 9, FS - 10


CORPORATE GOvERNANCE

Asacapitalmarketconglomerate,weatNCAPgivehighestprecedencetoensurecompliancetoprinciplesofgoodgovernance.Wehaveadoptedandadheredtoastronggovernancestructuretoconductouroperationsinanethical,legalandfinanciallyresponsiblemanner.Thisisnotonlysignificantforourlongtermsustainability,butalsoprotectsourCompany,Directors,employees,shareholdersandexternalstakeholdersfromaplethoraofriskexposures.

CORPORATE GOvERNANCE STRUCTURETheNCAP’sgovernancestructure,practicesandcompliancemeasuresadoptedandimplementedundertheablestewardshipoftheChairmanandtheBoardofDirectorsarealignedtothetheCorporateGovernanceRulesasperSection7.10stipulatedundertheListingRulesoftheColomboStockExchange(CSE).DespitedelistingweshallcontinuetoalignourselveswithCorporateGovernanceBestPracticesasfaraspracticableasanunlistedcompany.Givenbelowaresomeofthesalientfeaturesofourgovernancestructure.

BOARD AND DUTIESBoard CompositionTheBoardofDirectorsistheapexbodyresponsibleandaccountableforthestewardshipoftheCompany.AsatendDecember2014,theBoardofDirectorsofNDBCapitalHoldingsLimitedcomprisedofsixDirectors,fiveofwhomareNon-ExecutiveDirectorsincludingtheChairman.TheChiefExecutiveOfficerisanExecutiveDirector.

OutofthefiveNon-ExecutiveDirectors,twoareIndependentDirectorsinlinewiththecorporategovernanceprinciplesandtherulesoftheCSE.IndependenceofDirectorsisdeterminedaspertheListingRulesoftheCSE.

versatility and Professionalism of the BoardAllDirectorsarewellreputedandrespectedprofessionalswithimpeccabletrackrecords.Theybringvastexpertiseandexperiencetothedecisionmakingprocess.TheDirectorsworktogetherasanefficientteamandexerciseindependentjudgment,skillanddiligenceindischargingtheirduties.

Directors’profilesaregivenonpages112-113ofthisAnnualReport.

Responsibilities of the BoardTheBoardisresponsibleinleadingtheorganisationtomeetthecorporategoalsalignedtothevisionandmissionoftheNCAPGroup.TheBoardplaysanactiveroleinformulatingthecorporatestrategyandtheactionplans.

TheBoardfurthercloselymonitorstheoutput/outcomeofsuchstrategyandplansperiodicallyandguidestheCompanytotakenecessarymeasuresifthecorporategoalsandtargetsarelaggingornotmet.

Board and Board Committee MeetingsTheBoardmeetsonaquarterlybasistomakeeffectivedecisionsontheGroupstrategy,corporategoalsandtocarryoutperformancereviews.Additionalmeetingsareheldasandwhenrequired.TheBoardmet4timesduringtheyearunderreview.Informationrequiredandnecessarytocarryouteffectiveproceedingswhichincludereviews,reportsandad-hocinformationaresubmittedtotheDirectorsinatimelymanner.

TheBoardCommitteesunderthepurviewoftheBoardmeetonaregularbasistodischargetheirsupervisoryduties.

CHAIRMAN AND CEOTherolesoftheChairmanandtheChiefExecutiveOfficerareclearlysetoutandwellsegregatedtoensurebalanceofpowerandauthority.Thispreventsanyoneindividualfromholdingunfettereddecisionmakingpowers.

Appraisal of the CEOAdynamicprocessisinplacetoevaluatetheperformanceoftheChiefExecutiveOfficerinlinewiththecorporatetargetssetoutfortheGroup.TheCEO’sperformanceisevaluatedattheendofthefinancialyearbytheBoard.

DIRECTOR DISCLOSURESTheBoardofDirectorssubmitthedisclosuresrelevantandnecessaryaspertheCSEListingRulesandotherrelevantregulatorybodiesasprescribed.AsatendDecember2014,alldisclosureshavebeensubmittedontime.

GRI-G4 / G4 - 34



BOARD COMMITTEES Audit, Risk and Compliance CommitteeTheBoardhasestablishedtheAudit,RiskandComplianceCommitteetoassisttheBoardintheoversightfunctionintermsoffinancial,riskandcomplianceoftheexecutionofthecorporatestrategy,actionsplansandfinancialreportingandtomakerecommendationsforaneffectivedecisionmakingprocess.Duringtheyearunderreview,theBoardreviewed,revisedandadoptedanewCharterfortheAudit,RiskandComplianceCommitteewhichclearlysetsoutthecomposition,scope,responsibilitiesandduties.TheprimarydutiesoftheCommitteeassetoutintheCharteraregivenbelow.

▪ Overseeandassessreliabilityandintegrityoffinancialstatements,accountingpoliciesandfinancialreporting

▪ EnsureCompliancewithlegalandregulatoryrequirements

▪ Overseetheexternalandinternalauditfunctions

▪ Overseeandassessriskmanagementstructure,adequacy,assessmentandmitigatorymeasures

▪ OverseetheGroupcompliancefunctions

TheAudit,RiskandComplianceReportfortheyearended2014issetoutonpages134-136ofthisAnnualReport.

Human Resources and Remuneration CommitteeTheBoardhasinplaceaCommitteeonHumanResourcesandRemunerationtooverseeandmakeduerecommendationsonremunerationforDirectors,seniormanagement,executivestaffandotheremployees.NCAPremunerationisdeterminedbasedonatransparentRemunerationPolicywhichisalignedtothebestpracticesintheindustry.SalientdutiesoftheHumanResourcesandRemunerationCommitteearesetoutbelow:

▪ DeterminethehumanresourcesandremunerationpoliciesofDirectors,ChiefExecutiveOfficer,keymanagementpersonnelandotherstaffmembersoftheCompanyandsubsidiaries

▪ SetgoalsandtargetsfortheChiefExecutiveOfficerandkeymanagementpersonneloftheCompanyandsubsidiaries

▪ EvaluatetheperformanceoftheChiefExecutiveOfficerandkeymanagementpersonnelagainstthesettargetsandgoalsperiodically

▪ Determinethebasisforrevisingremuneration,benefitsandotherpaymentsofperformance-basedincentivesincludingEmployeeShareOwnershipScheme(ifinplace).

Investment CommitteeTheInvestmentCommitteeisresponsibletoreviewandrecommendinvestmentpoliciestotheNCAPBoard.TheCommitteeisalsoresponsibletoapproveinvestmentssubjecttodelegationswhichmaybeextendedbytheBoardandreviewtheperformanceofinvestmentsmadebytheCompany.ThesalientdutiesoftheInvestmentCommitteearesetoutbelow.

▪ Reviewandrecommendinvestmentpoliciesrelatedtolistedequity,privateequity,fixedincomesecurities,hybridsecurities,derivatives,anyothersuitableassetclassesandoff-balancesheetexposuresforBoardapproval

▪ Reviewinvestmentpoliciestodeterminewhethertherehavebeenanymaterialchangestothegoalsandobjectivesortotherisk/returnprofileoftheCompany

▪ ApproveinvestmentssubjecttodelegationswhichmaybeextendedbytheBoardofNCAPfromtimetotime

▪ ReviewtheperformanceofinvestmentsmadebytheCompany

▪ Reviewcurrenteconomic,politicalandinvestmentclimateandtheirimplicationsontheoverallinvestmentstrategy

FINANCIAL REPORTINGTheAnnualReportpresentsacomprehensiveandanimpartialreviewoftheGroup’soperationalperformance,financialposition,futureoutlookandplanstogetherwiththeFinancial


Statementsandtherelatednotes.TheAnnualReportcontainskeyreports-Chairman’sMessage,CEO’sReview,ManagementDiscussionandAnalysis,Directors’ResponsibilityStatementandAnnualReportoftheBoardofDirectorsontheAffairsoftheCompany.TheCompanyalsodisclosesontheinternalcontrols,riskmanagementprocessesincludingriskanalysisandthemitigatorymeasures.Goodgovernanceandcomplianceisavitalpartoftheannualreporting.

LISTING RULES OF THE CSEAlthoughnolongerlistedasaresultofhavingbeingdelistedfromtheofficiallistoftheColomboStockExchange(CSE)witheffectfrom26thJanuary2015,theCompanyiscommittedtocomplyingwiththecorporategovernancerulesstipulatedunderSection7.10oftheListingRulesoftheCSE.SetoutbelowisthelevelofcompliancebytheCompanyontheListingRulesonCorporateGovernance.


ThoughNCAPhasbeende-listedfromtheCSEwitheffectfromJanuary26,2015,wehavemadeeveryefforttoadheretocorporategovernancerulesoftheCSEasifitwerealistedCompany.

CORPORATE GOvERNANCE RULES UNDER THE LISTING RULES OF THE CSE

rule CompliaNCe status remarks

7.10.1 Non-Executive Directorsa} TheBoardofDirectorsofalistedentityshall

includeatleasttwonon-executivedirectors;orsuchnumberofnon-executivedirectorsequivalenttoonethirdofthetotalnumberofdirectors,whicheverishigher.

b) The total number of directors is to be calculated based on the number as at the conclusion of the immediatelyprecedingannualgeneralmeeting.

(c) Anychangeoccurringtothisratioshallberectifiedwithin90daysfromthedateofthechange.

Complied OutofthesixDirectorsasat31.12.2014fivewereNon-ExecutiveDirectors.Mr.C.VKulatilaka,theCEOoftheCompanyisanExecutiveDirector.

7.10.2 Independent Directors(a) WheretheconstitutionoftheBoardofDirectors

includesonlytwonon-executivedirectorsasmentionedabove,bothsuchnon-executivedirectorsshallbe'independent'.Inallotherinstancestwoor1/3ofnon-executivedirectorsappointedtotheBoardofDirectors,whicheverishighershallbe‘independent'.

b) Theboardshallrequireeachnon-executivedirectortosubmitasignedanddateddeclarationannuallyofhis/herindependenceornon-independenceagainstthespecifiedcriteria.

Complied

Complied

OutoftheFiveNon-ExecutiveDirectors,twoDirectorsoftheCompanywereIndependentDirectorsasat31.12.2014.ThreeDirectorsarenotindependentduetotheirinvolvementintheparentcompanyNationalDevelopmentBankPLC(NDB)whichowns99.9%sharesoftheCompany.

AllDirectorshavesubmittedasignedDeclarationoftheirindependence.IndependenceoftheDirectorshasbeendeterminedinaccordancewiththeCSEListingRules.

7.10.3 Disclosures Relating to Directors(a) Theboardshallmakeadeterminationannuallyas

totheindependenceornon-independenceofeachnon-executivedirectorbasedonsuchdeclarationandotherinformationavailabletotheboardandshallsetoutintheannualreportthenamesofdirectorsdeterminedtobe'independent'

(b] Intheeventadirectordoesnotqualifyas'independent'againstanyofthecriteriasetoutinclause7.10.4butiftheboard,takingaccountallthecircumstances,isoftheopinionthatthedirectorisnevertheless'independent',theboardshallspecifythecriterianotmetandthebasisforitsdeterminationintheannualreport.

Complied

NotApplicable

BasedonthedeclarationsreceivedfromtheDirectors,twoDirectorsnamelyMs.ARajakarierandMr.WMDeFonsekaArsakularatneoftheCompanywereIndependentDirectorsasat31.12.2014.ThreeDirectorsarenotindependentduetotheirinvolvementintheparentcompanyNationalDevelopmentBankPLC(NDB)whichowns99.9%sharesoftheCompany,andoneDirectornamelyMr.CVKulatilakaisanExecutiveDirector.




c) Inadditiontodisclosuresrelatingtotheindependenceofadirectorsetoutabovetheboardshallpublishinitsannualreportabriefresumeofeachdirectoronitsboardwhichincludesinformationonthenatureofhis/herexpertiseinrelevantfunctionalareas.

d) Uponappointmentofanewdirectortoitsboard,thecompanyshallforthwithprovidetotheExchangeabriefresumeofsuchdirectorfordisseminationtothepublic.Suchresumeshallincludeinformationonthemattersitemizedinparagraphs(a),(b)and(c)above

Complied

Compliedwithduringtheyear2014

BriefresuméofeachDirectoroftheCompanyasatthedateoftheannualreport,aresetoutonpages112-113oftheAnnualReport.

NolongerapplicableinviewoftheCompanyhavingdelistedfromtheofficiallistoftheColomboStockExchangewitheffectfrom26thJanuary2015.

7.10.4 Criteria for Defining Independencea)–(h)RequirementsformeetingthecriteriatobeanIndependentDirector

Complied DeclarationshavebeenreceivedfromtheDirectorsoftheircompliancewiththeindependencecriteriagivenintheCSEListingRules.

7.10.5 Remuneration CommitteeAlistedcompanyshallhavearemunerationcommitteeinconformitywiththefollowing:Composition:Theremunerationcommitteeshallcompriseofaminimumoftwoindependentnon-executivedirectors(ininstanceswhereacompanyhasonlytwodirectorsonitsboard);orofnon-executivedirectorsamajorityofwhomshallbeindependent,whichevershallbehigher.

▪ Inasituationwhereboththeparentcompanyandthesubsidiaryare'listedcompanies',theremunerationcommitteeoftheparentcompanymaybepermittedtofunctionastheremunerationcommitteeofthesubsidiary.

▪ However,iftheparentcompanyisnotalistedcompany,thentheremunerationcommitteeoftheparentcompanyisnotpermittedtoactastheremunerationcommitteeofthesubsidiary.Thesubsidiaryshouldhaveaseparateremunerationcommittee.

▪ Onenon-executivedirectorshallbeappointedaschairmanofthecommitteebytheboardofdirectors.

Complied

NotApplicable

NotApplicable

Complied

TheHumanResourcesandRemunerationCommitteeoftheCompanyconsistsoftwoIndependentNon-ExecutiveDirectorsandoneNon-ExecutiveDirector.

TheCompanyhasitsownRemunerationCommittee.

Theparentcompanyisalistedentity,however,theCompanyhasformeditsownRemunerationCommittee.

Ms.RajakarieraNon-ExecutiveIndependentDirectoroftheCompanyistheChairpersonoftheCommittee.



b) Functions;TheRemunerationCommitteeshallrecommendtheremunerationpayabletotheexecutivedirectorsandchiefexecutiveofficerofthelistedentityand/orequivalentpositionthereoftotheBoardofthelistedentity,whichwillmakethefinaldeterminationuponconsiderationofsuchrecommendations.

Complied TheremunerationoftheExecutiveDirectorsandChiefExecutiveOfficerisdeterminedaspertheGroupremunerationpoliciesandtherecommendationsgivenbytheHumanResourcesandRemunerationCommitteeoftheCompany.

c) Disclosure:Theannualreportshouldsetoutthenamesofdirectors(orpersonsintheparentcompany'scommitteeinthecaseofagroupcompany)comprisingtheremunerationcommittee,containastatementoftheremunerationpolicyandsetouttheaggregateremunerationpaidtoexecutiveandnon-executivedirectors.

# Theterm'remuneration'shallmakereferencetocashandallnon-cashbenefitswhatsoeverreceivedinconsiderationofemploymentwiththelistedcompany(excludingstatutoryentitlementssuchasEmployees'ProvidentFundandEmployees'TrustFund).

Complied ThemembersoftheRemunerationCommitteeoftheCompanyasat31stDecember2014are:

1) MsAruniRajakarier(Chairperson)2) MrAshokPathirage3) MrMalingaArsakularatne

TheaggregateremunerationpaidtotheExecutiveandNon-ExecutiveDirectorsisprovidedinpage129

7.10.6 Audit CommitteeAlistedcompanyshallhaveanauditcommitteeinconformitywiththefollowing:a) Composition:Theauditcommitteeshallcomprise

ofaminimumoftwoindependentnon-executivedirectors(ininstanceswhereacompanyhasonlytwodirectorsonitsboard)orofnon-executivedirectors,amajorityofwhomshallbeindependent,whichevershallbehigher.

▪ Inasituationwhereboththeparentcompanyandthesubsidiaryare'listedcompanies',theauditcommitteeoftheparentcompanymayfunctionastheauditcommitteeofthesubsidiary.

▪ However,iftheparentcompanyisnotalistedcompany,thentheauditcommitteeoftheparentcompanyisnotpermittedtoactastheauditcommitteeofthesubsidiary.Thesubsidiaryshouldhaveaseparateauditcommittee.

Complied

NotApplicable

NotApplicable

TheAuditCommitteeoftheCompanycomprisesoftwoIndependentNon-ExecutiveDirectorsandoneNon-ExecutiveDirector.

TheCompanyhasformeditsownAuditCommittee.

Theparentcompanyisalsoalistedentity;however,theCompanyhasformeditsownAuditCommittee.




▪ Onenon-executivedirectorshallbeappointedaschairmanofthecommitteebytheboardofdirectors.

▪ Unlessotherwisedeterminedbytheauditcommitteethechiefexecutiveofficerandthechieffinancialofficerofthelistedcompanyshallattendauditcommitteemeetings

Complied

Complied

Ms.Rajakarieranon-executivedirectoroftheCompanyistheChairpersonoftheCommittee.

TheChiefExecutiveOfficer,GroupChiefFinancialOfficerandtheGroupHeadofInternalAudithaveattendedalltheCommitteemeetings.

▪ ThechairmanoronememberofthecommitteeshouldbeaMemberofarecognizedprofessionalaccountingbody.

Complied TheChairpersonandoneothermemberoftheAuditCommitteearemembersoftheInstituteofCharteredAccountantsofSriLanka.

b) Functionsshallinclude▪ Overseeingofthepreparation,presentationand

adequacyofdisclosuresinthefinancialstatementsofalistedentityinaccordancewithSriLankaAccountingStandards.

▪ OverseeingoftheCompany'scompliancewithfinancialreportingrequirements,informationrequirementsoftheCompaniesActandotherrelevantfinancialreportingrelatedregulationsandrequirements.

▪ Overseeingtheprocessestoensurethattheentity'sinternalcontrolsandriskmanagementareadequate,tomeettherequirementsoftheSriLankaAuditingStandards.

▪ Assessmentoftheindependenceandperformanceofthecompany'sexternalauditors.

▪ Tomakerecommendationstotheboardpertainingtoappointment,reappointmentandremovalofexternalauditorsandtoapprovetheremunerationandtermsofengagementoftheexternalauditors.

Complied

Complied

Complied

Complied

Complied

ThefunctionsoftheAuditCommitteearelaiddownintheBoardAudit,RiskandComplianceCommitteeCharterapprovedbytheBoardofDirectorsandincludeallthefunctionsspecifiedintheCSEListingRules.



(c) DisclosureintheAnnualReport▪ Thenamesofthedirectors(orpersonsinthe

parentcompany'scommitteeinthecaseofagroupcompany)comprisingtheauditcommitteeshouldbedisclosedintheannualreport

▪ Thecommitteeshallmakeadeterminationoftheindependenceoftheauditorsandshalldisclosethebasisforsuchdeterminationintheannualreport.

▪ Theannualreportshallcontainareportbytheauditcommittee,settingoutthemannerofcompliancebytheCompanyinrelationtotheabove,duringtheperiodtowhichtheannualreportrelates.

Complied

Complied

Complied

ThemembersoftheAuditCommitteeoftheCompanyasat31stDecember2014are:Ms.AruniRajakarier-ChairpersonMr.MalingaArsakularatneMr.SarathWikramanayake

TheReportoftheAudit,RiskandComplianceCommitteeissetoutonpages134-136ofthisAnnualReport.



1.

5. 6.

7.

3. 4.

2.

BOARD OF DIRECTORS


1.Mr. Ashok PathirageChairmanMr.Pathirageisoneoftheco-foundersofSoftlogicandwasappointedasChairmanofSoftlogicin2000.HewasappointedasDeputyChairmanofNationalDevelopmentBankPLCin2011.HeisalsotheChairman/ManagingDirectorofAsirihospitalchain,SoftlogicCapitalPLC,SoftlogicFinancePLC,AsianAllianceInsurancePLC,andOdelPLCwhicharelistedinadditiontotheprivatecompaniesoftheGroupoperatinginLeisureandRestaurants,Retail,AutomobileandICTindustries.Duetohisbusinessacumenandcorporateleadershipheisoneofthetopbusinessleadersinthecountry.

2.Mr. Rajendra TheagarajahDirectorMr.TheagarajahjoinedtheGroupfromoneofthelargestprivatesectorbanksinSriLankawherehewastheCEO.PriortobeingappointedastheChiefExecutiveOfficeratthesaidbank,Mr.TheagarajahhadbeenamemberoftheCorporateManagementTeamofthatbankfornearlyeightyears.

Mr.Theagarajahcountsover30yearsofexperienceinbanking,includingoverseasexperience.HehadbeenwithChaseManhattanBank(nowknownasJPMorganChase)inLondonandhadservedintheEuropean,MiddleEasternandAfricanAreaoffice.

Mr.TheagarajahisaFellowMemberoftheInstituteofCharteredAccountantsofSriLanka(ICASL)andtheCharteredInstituteofManagementAccountants(CIMA),UnitedKingdom.HealsoholdsaMBAfromtheCranfieldSchoolofManagement,UnitedKingdom.

Hiscontributionandexpertisehasalsobeenextendedthroughmanyprofessionalbodies.HewasapastChairmanofSriLankaBanks’Association(Guarantee)Ltd,ChairmanofAsianBanksAssociationandaformerDirectoroftheColomboStockExchange.HewasthefirstSriLankantoassumeChairmanshipoftheAsianBanks’AssociationfromNovember1,2010foratwo-yeartenure.

HeisalsoaformermemberoftheSriLankaAccountingandAuditingStandardsMonitoringBoard,DeputyViceChairmanofCeylonChamberofCommerceandimmediatepastChairmanoftheCharteredInstituteofManagementAccountants(U.K.)SriLankaGoverningBoard.HeisalsoSriLanka’srepresentativeintheCIMAUK’sGlobalCouncil.HeisalsoanindependentNon-ExecutiveDirectorofCarsonCumberbatchPLCandseveralcompaniesintheNDBGroup.

3.Mr. vajira KulatilakaDirector/CEOMr.KulatilakaholdsaBScinCivilEngineeringwithFirstClassHonoursfromtheUniversityofMoratuwaandaM.ScinIndustrialEngineeringandManagement,fromtheAsianInstituteofTechnology,Thailand.HeisaCharteredFinancialAnalyst(CFA)andisaFellowMemberofTheCharteredInstituteofManagementAccountants,UK.Mr.KulatilakaistheCEOoftheInvestmentBankingclusteroftheNDBGroupandisaDirectorofNDBInvestmentBank,NDBSecurities(Pvt)Limited,NDBWealthManagementLimited,NDBZephyrPartnersLimited,NDBCapitalLimitedandResusEnergyPLC.Heisatpresent,theChairmanoftheColomboStockExchange(CSE)andtheChairmanoftheSouthAsianFederatingofExchanges(SAFE).Mr.KulatilakaisalsoaMemberoftheGoverningCounciloftheUniversityofMoratuwa.Hecountsforover30yearsofexperienceinBankingandFinanceandCapitalMarketoperationsinSriLanka.PriortojoiningtheNDBGroup,heworkedatSampathBank,USAIDandCKNFundManagement(Pvt)Limited.Hehasbeeninstrumentalinintroducinganumberofinnovativefinancialproductstothecountry.

4.Mr. Sarath wikramanayakeDirectorMr.WikramanayakeisaCharteredAccountant.HehasworkedpreviouslywiththeBankofButterfield,aBermuda-basedinternationalbankfor19years,wherehereachedthepositionofExecutiveVice-President.SincereturningtoSriLanka,hehasbeentheChiefExecutiveOfficerofUnionAssuranceLtdandthePresidentoftheInsuranceAssociationofSriLankain2002.HeiscurrentlyengagedinprovidingconsultancyservicestotheFinancialServicesandICTIndustries.Inadditiontohisroleas



aDirectorofNDBCapitalHoldingsLTD.Mr.WikramanayakeisalsoaDirectortoseveralothercompaniesincludingNationalDevelopmentBankPLC,OrientFinancePLC,BartleetsFinancePLC,NDBInvestmentBankLtdandNDBWealthManagementLtd

5.Ms. Aruni Rajakarier DirectorMs.Rajakarierhasover25yearsworkingexperienceasafinanceprofessionalandisafounderdirectorofSheConsults(Pvt)Ltd,afinancialconsultingcompany.Duringthisperiodthecompanyhasbuiltupaportfolioofclientsinthefinancialsectorprovidingservicessuchasstrategicplanning,implementationofGRIreportingframework,investmentproposals,corporatereportwritingandsustainabilityreportwriting.ShealsoworksinthecapacityofConsultanttoWorldBankapartfromtheworkdonewithSheConsults.AruniservesontheboardofNDBCapitalHoldingsLTDasanindependentnon-executivedirectorandistheChairpersonoftheAuditCommitteeandtheRemunerationCommitteeandamemberoftheInvestmentCommittee.SheisanAssociatememberoftheInstituteofCharteredAccountants,SriLanka.

PriortofoundingSheConsults,sheservedastheCountryManagerforACCASriLankawithadditionalresponsibilityfortheMaldivesforalmost7years.Inthisroleshewasresponsibleforformulatinglocalstrategyalignedtoglobalstrategy,marketingthequalificationsandbuildingACCAsreputationandinfluenceandmanagingkeyrelationshipsinthemarketsunderherpurview.PriortothisshewaswithNDBBankasAssistantVicePresidentCorporateBanking.HerotherrolesatNDBincludeSeniorManagerMerchantBankingandConsultancyandConsultantInternalAudit.BeforejoiningNDBsheservedasFinanceDirectorofLankaCellularServices(Pvt)Ltd,then,asubsidiaryofSingaporeTelecom.ShewastrainedatErnst&YoungwheresheservedasSeniorManagerinbothauditingandconsultancy.

6.Mr. Malinga ArsakularatneDirector Mr.ArsakularatneisanExecutiveDirectorandtheChiefFinancialOfficerofHemasHoldingsPLC.Heisalsoamember

oftheBoardofManagementofHemasGroup.HehasbeenapartoftheHemasGroupsince2004andhadgainedover8yearsofexperienceintheFundManagementIndustrypriortojoiningHemas.Mr.ArsakularatnealsoservesontheBoardsofSerendibHotelsPLC,DolphinHotelsPLCandHotelSigiriyaPLC.HeisaCFACharterHolderandPastPresidentofCFASriLanka.HeisalsoaFellowMemberoftheCharteredInstituteofManagementAccountantsandPastBoardMemberoftheCIMASriLankaDivision.HehasaBScinComputerScienceandEngineeringfromtheUniversityofMoratuwa,anMScinInvestmentManagementfromCassBusinessSchool,andanExecutiveMBAfromINSEAD.

7.Mr. Faizan OzmanDirectorMr.OzmancurrentlyservesastheGroupChiefFinancialOfficerofNationalDevelopmentBankPLC(NDB).Mr.Ozmancountsover20yearsofmanagementexperienceandexposurebothlocallyandinternationallyacrossawidespectrumofbankingandfinancialservicessuchascorporatebanking,riskmanagement,internationalmarkets,OperationsandStrategicplanning.

PriortojoiningNDBin2011,Mr.OzmanservedastheHeadofRiskManagementandCompliance/ChiefRiskOfficerofSeylanBankPLC.HehasservedatStandardCharteredBankforaperiodof11yearsfrom1999to2010wherehehadfunctionedastheChiefOperatingOfficerandtheChiefFinancialOfficer.HeplayedaleadroleintheintegrationofStandardCharteredBankwithGrindlays,UnionBankandAmericanExpressBankinSriLanka.Mr.OzmanalsoservedatCitibankN.A.from1990to2010managingcorporateandmultinationalrelationships.

Mr.OzmanisaFellowmemberoftheCharteredInstituteofManagementAccountantsoftheUnitedKingdomandaCertifiedPublicAccountantofAustraliaandaCertifiedManagementAccountantofAustralia.HeobtainedhisfirstdegreeinBusinessandCommercefromtheUniversityofSriJayewardenepura,SriLanka.HehasalsoattendedexecutiveleadershiptrainingprogrammesatInseadFranceandStanfordU.S.A.


SENIOR MANAGEMENT


8.

2.

5.

NDB INvESTMENT BANK LTDMr. Darshan PereraChief Executive Officer

NDB ZEPHYR PARTNERS LANKA (PvT) LTDMr. Senaka Kakiriwaragodage CFAManaging Director

NDB CAPITAL HOLDINGS LTD

Ms. vidushini DenipitiyaInterim Compliance Officer

9.

3.

6.

NDB wEALTH MANAGEMENT LTDMr. Prabodha SamarasekeraChief Executive Officer

NDB CAPITAL HOLDINGS LTDMr. Kusal JayawardanaChief Operating Officer

NDB INvESTMENT BANK LTDMs. Kaushini LaksumanageChief Operating Officer

10.

4.

7.

NDB SECURITIES (PvT) LTDMs. Prasansani MendisChief Executive Officer

NDB CAPITAL HOLDINGS LTDMs. Anusha NishanthiHead of Compliance

NDB INvESTMENT BANK LTDMs. Avanthi DissanayakeVice President


11.

14.

17.

NDB INvESTMENT BANK LTDMr. Shahane De S. GunasekeraAssistant Vice President

NDB INvESTMENT BANK LTDMr. viraj wijesingheAssistant Vice President

NDB wEALTH MANAGEMENT LTDMs. vindhya JayasekeraAssistant Vice President

13.

16.

19.

NDB INvESTMENT BANK LTDMr. Nilendra weerasingheAssistant Vice President

NDB wEALTH MANAGEMENT LTDMs. Bimanee MeepagalaAssistant Vice President

NDB SECURITIES (PvT) LTDMr. Jagath Jayantha SamarasingheAssistant Vice President - Sales

12.

15.

18.

NDB INvESTMENT BANK LTDMr. Udana SiriwardanaAssistant Vice President

NDB wEALTH MANAGEMENT LTDMr. Ruwan PereraChief Operating Officer

NDB SECURITIES (PvT) LTDMr. Gihan R. CoorayVice President –Head of Sales


NDB CAPITAL HOLDINGS LTD1.Mr. vajira KulatilakaDirector/CEO(Refer page 112 for the profile of Mr. Kulatilaka)

NDB INvESTMENT BANK LTD2.Mr. Darshan PereraChief Executive OfficerMr.DarshanPererajoinedtheNDBGroupin2001andhasbeenheadingitsInvestmentBankingarmsince2009.Hecountsforover20yearsofexperienceinthefinancialservicessectorcoveringareasofinvestmentbanking,corporatefinanceandcommercialbanking.Hehastohiscredit,ledteamsthathavesuccessfullymanagedalargenumberofIPOs,mostofwhichhaveachievedrecordbreakingresults,andotherfundsraisingdeals.Heholds


20. 21. 22.

23. 24.

NDB SECURITIES (PvT) LTDMr. Aroos FaleelAssistant Vice President - Sales

NDB SECURITIES (PvT) LTDMr. Sidath KalyanaratneAssistant Vice President–Head of Research

NDB SECURITIES (PvT) LTDMs. Surangi widanaarachchiAssistant Vice President - Finance and Compliance

NDB ZEPHYR PARTNERS LANKA (PvT) LTDMr. Mahesh AmarasiriPrincipal

NDB SECURITIES (PvT) LTDMr. Nalin wickramatillekeAssistant Vice President- Information Technology

aBScinPhysicalScienceandanMBAfromtheUniversityofColombo.HeisanAssociateMemberoftheInstituteofBankers,SriLankaandtheCharteredInstituteofMarketing,UK.HealsoholdsCIMAqualification.PriortojoiningNDBIB,heworkedatVanikIncorporationLtdasanAssistantVicePresident.HealsofunctionsasaTrusteetoNDBCapitalScholarshipTrust.

NDB wEALTH MANAGEMENT LTD3.Mr. Prabodha SamarasekeraChief Executive OfficerMr.PrabodhaSamarasekeraoffersasuccessfulbackgroundinassetmanagementandhasover20yearsofexperiencewithinthefinancialservicesindustry.Hehasgainedextensiveexperienceandtraininginbanking,financeandcapitalmarketsintheU.S.A,HongKong,SingaporeandSriLanka.Hisresponsibilitieshaveincludedthesuccessfulsettingupandmanagingallaspects


NDB CAPITAL HOLDINGS LTD6.Mr. Kusal JayawardanaChief Operating OfficerMr.KusalJayawardanaisaCharteredFinancialAnalystandAssociateMemberoftheCharteredInstituteofManagementAccountants,UK.HealsoobtainedtheAssociateMembershipoftheAssociationofCharteredCertifiedAccountants,UKandholdsaMasterofBusinessAdministrationfromtheOpenUniversityofColomboincollaborationwithCommonwealthofLearning,Canada.Mr.Jayawardanacountsover17yearsexperienceininvestmentbanking.Hehasauniquecombinationofexpertiseinequitycapitalmarkets,debtcapitalmarkets,corporateadvisory,mergersandacquisitionsandinvestment management and has involved in introducing a number ofinnovativecapitalmarketproductstoSriLankaandBangladesh.KusalstartedNDB’sinvestmentbankingoperationinBangladeshandwastheCEOofNDBCapitalLimited,Bangladeshpriortothepresentassignment.PreviouslyhehadworkedatVanikIncorporationLimitedandKPMG,Colombo.Kusalispresentlyanon-executivedirectorofResusEnergyPLCandPanasianPowerPLCandalsoamemberoftheauditcommitteesofthetwocompanies.

NDB CAPITAL HOLDINGS LTD.7.Ms. Anusha NishanthiHead of ComplianceMs.AnushaNishanthiistheHeadofComplianceofNCAPwheresheisresponsibleforoverallgroupcompliance.SheisanAttorney-at-lawandhasover8yearsofcombinedexperienceincommerciallawandcomplianceinthefinancialservicesindustry.BeforejoiningNCAPin2013,sheservedattheSecuritiesandExchangeCommissionofSriLanka,HeraymilaGroup,AsiaCapitalPLCandM/sPaulRathnayekeAssociates.HerinternshipsincludetheCenterforInternationalCorporateGovernanceResearch-Australia,Julius&CreasyandLankemCeylonPLC.Ms.NishanthihasaLL.BSecondClassHonours(Upper)DegreefromtheUniversityofColombo.SheisanawardeeoftheAustralianLeadershipAwardunderwhichshecompletedherLL.MinCommerciallawattheUniversityofMelbourne,Australia.Ms.AnushaNishanthireceivedtheprestigiousFulbright/HumphreyFellowshipfundedbytheU.SCongressin2014.SheiscurrentlyundertakingcoursesfromLL.MinFinance&BankingProgramfromtheSchoolofLaw–BostonUniversity,U.Sandfocusesoncompliance,riskmanagementandgovernance.Ms.NishanthirecentlystartedaprofessionalaffiliationwiththeU.SSecuritiesandExchangeCommissionandwillcompletehersecondprofessionalaffiliationwiththeState

ofafundmanagementbusiness.HehassteeredNDBWealthManagementfrom2008tomakeitSriLanka’slargestprivatesectorfundmanagementfirm.HehasaBScinManagementInformationSystemsandanMBAfromtheUniversityofSouthernCalifornia,Los-Angeles,U.S.A.

NDB SECURITIES (PvT) LTD4.Ms. Prasansani MendisChief Executive OfficerMs.PrasansaniMendisjoinedtheNDBGroupin1990.SheholdsaBCom(Special)DegreeandisaCIMAfinalist.PriortojoiningNDBshefunctionedasanAccountantforaroundfouryearsintwoleadingprivatecompanies.ShehasbeenaBankerforover17yearsandhasgainedwideexperienceincorporatefinance,merchantbankingandconsultancy,auditandrestructuringofcompanies.ShealsofunctionedastheHeadofSpecialProjectsandLeasingDepartmentsofNDB.InadditionshewasinvolvedinsettingupoftheinitialbranchofNDBandtheMaldivianleasingsubsidiary.In2008,shejoinedNDBSecurities(Pvt)LtdastheCEO.

NDB ZEPHYR PARTNERS LANKA (PRIvATE) LTD5.Mr. Senaka KakiriwaragodageManaging DirectorMr.SenakaKakiriwaragodageistheManagingDirectorofNDBZephyrPartnersLanka(Private)LimitedandpreviouslyhewastheVicePresidentandHeadofCapitalmarketsatNDBInvestmentBank(NDBIB)andpossesses10yearsofinvestmentbankingexperienceatNDBIB.PriortojoiningNDBIBheworkedasaseniorsoftwareengineeratVirtusaInc,aU.S.A.headquarteredITServicescompanyfor2years.HewastheonsiteteamleaderforassignmentsforU.S.A.basedclientssuchasMorganStanleyandBearStearns.Hehasextensiveexperienceinvaluations,IPOs,equityplacementsandM&AacrossarangeofindustrysectorsinSriLanka.Inaddition,hehasledmanyadvisorytransactionssuchasstructuringESOPs,operationalandfinancialrestructuringofcompanies,feasibilitystudiesanddiagnosticstudiesforSriLankancompanies.

Mr.KakiriwaragodageisaFellowMemberofCharteredInstituteofManagementAccountants,UKandholdsaMBAwithDistinctionfromUniversityofManchesterandaBScFirstClassHonoursDegreefromUniversityofMoratuwa.HeisalsoaCFACharterholderandaBoardMemberofCIMASriLanka.



StreetGlobalAdvisors,U.S.SheisalsoaTrusteetotheNDBCapitalScholarshipTrust.

NDB CAPITAL HOLDINGS LTD.8.Ms. vidushini DenipitiyaInterim Compliance OfficerMs.VidushiniDenipitiyaisanAttorney-at-LawandanAssociateMemberofCharteredInstituteofManagementAccountants,UK.SheobtainedherMBAfromPostGraduateInstituteofManagement,UniversityofSriJayawardenepura.Ms.DenipitiyahasaBSc(Hons)inBusinessComputingfromUniversityofWolverhampton.Ms.DenipitiyahasoverfouryearsofexperienceininvestmentbankingincludingcomplianceforNCAPGroup.PriortojoiningNDBInvestmentBank,shehasworkedatAmsafeBridport(Private)LimitedandDialogAxiataPLC.

Ms.DenipitiyaiscurrentlyoverseeingtheGroupCompliancefunctionofNCAPGroup.

NDB INvESTMENT BANK LTD9.Ms. Kaushini LaksumanageChief Operating OfficerMs.KaushiniLaksumanagespecialisesinthemarketingandplacementofcapitalmarketinstruments.Sheisalsoanexpertintheareaofstructuredfinancehavingledteamsthathaveplacedthelargestsecuritisationsanddebenturesinthecountryaswellasbeinginstrumentalinintroducingnewfinancialproductsto SriLanka,suchasinterestrateswaps.

KaushiniisadedicatedfinancialprofessionalwithaB.Com(Hon),MajorFinanceandMarketing(CumLaude),UniversityofOttawa,Canada.OnherreturntoSriLankauponcompletionofherstudies,intheyear2000,shejoinedtheNDBGroup.ShewasappointedastheCOOofNDBIBinApril2010.

NDB INvESTMENT BANK LTD10.Ms. Avanthi DissanayakeVice PresidentMs.AvanthiDissanayakecountsover10yearsexperienceincapitalmarketsofSriLanka.SheholdsaBScSpecialDegreeinBusiness,FinanceandComputationalMathematicsfromtheUniversityofColombo.ShespecialisesinStructuredDebtincludingalltypesofasset-backedfinancing,loansyndications,debenturesandderivative

structures.Shehastakenpartinmanylandmarktransactionsleadingtheteamsincludingfirsttworatedsecuritisations,firstthreecreditcardsecuritisationsandthelargestcorporatedebentureissueuptodate.Shehassubstantialexperienceinmanagingkeyclientrelationshipsinstructuringandexecutingtransactions,andworkingwithCapitalMarketintermediariesindistributingproducts.

NDB INvESTMENT BANK LTD11.Mr. Shahane De S. GunasekeraAssistant Vice PresidentMr.ShahaneGunasekerahastenyearsofexperienceininvestmentbanking.Hisexperienceincludesagamutofinvestmentbankingactivitiesincludingmergersandacquisitions,restructuring,initialpublicofferings,debtandequityplacements,feasibilitystudies,diagnosticstudies,loansyndicationsandprojectFinancing.HeholdsaBScFirstClassHonorsDegreeinCivilEngineeringfromtheUniversityofMoratuwa.

NDB INvESTMENT BANK LTD12.Mr. Udana SiriwardanaAssistant Vice PresidentMr.UdanaSiriwardanapossessesover10yearsofbankingsectorexperienceincludingmorethan7yearsatNDBIB.HespecializesinstructuringandplacementofStructuredDebt,fixedincomesecurities,managingloansyndicationsandprojectFinancing.HewasactivelyinvolvedandprovidedleadershipinexecutingmanylandmarktransactionsatNDBIBincludingthefirstUSDdenominatedsyndicatedloan.Hehassubstantialexperienceinmanagingkeyclientrelationships.HeholdsaBBMFirstClassHonorsDegreeinFinancefromtheUniversityofBangaloreandanMBAinFinancefromtheUniversityofColombo.PriortojoiningNDBIBhehadworkedatDFCCBankPLCandPeople’sBank.

NDB INvESTMENT BANK LTD13.Mr. Nilendra weerasingheAssistant Vice PresidentMr.NilendraWeerasingheisaCFACharterholderandagraduateinComputerScienceandEngineeringwithaFirstClassHonoursDegreefromtheUniversityofMoratuwa.HealsoholdsanMBAinStrategyandOperationsfromtheNationalUniversityofSingapore.HispreviousworkexperienceincludesGoldmanSachsandVirtusaSriLanka,andhehasoverfiveyearsofexperienceininvestmentbanking.HeiscurrentlyinvolvedintheCorporateAdvisoryDivision


ofNDBIBandhasawidearrayofexperiencehavinghandledinitialpublicofferings,projectfinancing,loansyndicationsandmergersandacquisitions.

NDB INvESTMENT BANK LTD14.Mr. viraj wijesingheAssistant Vice PresidentMr.VirajWijesinghepossessesovereightyearsofexperienceincorporatefinance,financialriskmanagement,andinvestmentbanking.HejoinedNDBIBasanAssistantVicePresidentin2014.PriortojoiningNDBGrouphewaswiththeUniversalEnterprisesPvt.Ltd,inRepublicofMaldives,functioningastheGroupTreasuryManager.

VirajholdsaBBA,specializedinFinance,fromtheUniversityofColombo.HeisanAssociateMemberofCIMA(UK),aCFACharterholder,andaCertifiedFinancialRiskManager(FRM)fromGlobalAssociationofRiskProfessionalsinU.S.A.

NDB wEALTH MANAGEMENT LTD15.Mr. Ruwan PereraChief Operations OfficerMr.RuwanPererajoinedNDBGroupin2009andhasover14yearsexperienceinvarietyofstreamsinthefinancialsectorincludingPrimaryDealerandFundManagementIndustryinSriLanka.HewasappointedastheCOOofNDBWealthManagementinApril2014.

HeisanAssociateMemberoftheCharteredInstituteofManagementAccountants,UKandheholdsanMBAinFinancefromtheUniversityofColombo,aBScDegreeinPhysicalSciencefromtheUniversityofColombo.AtpresenthealsoservesastheSecretaryoftheUnitTrustAssociationofSriLanka.

NDB wEALTH MANAGEMENT LTD16.Ms. Bimanee MeepagalaAssistant Vice PresidentMs.BimaneeMeepagalacurrentlymanagesoneofthelargestinsuranceportfoliosinSriLankaandinstitutionalclientsatNDBWM.SheholdsaMastersofArtsinFinancialEconomics(MAFE)fromtheUniversityofColombo,aBachelorofArtsDegree,(BA)fromtheUniversityofColomboandisaFellowMemberoftheCharteredInstituteofManagementAccountants,UK(FCMA).Shecountsover9yearsofexperienceinequityresearchandasset

management.ShealsofunctionsastheSecretaryoftheInvestmentCommitteeofNDBWealthManagement.

NDB wEALTH MANAGEMENT LTD17.Ms. vindhya JayasekeraAssistant Vice PresidentMs.VindhyaJayasekeragraduatedinCivilEngineeringwithFirstClassHonorsfromtheUniversityofMoratuwa.SheisarecipientoftheFulbrightScholarshipunderwhichshecompletedherMScinFinanceattheUniversityofIllinois,U.S.A.withamedalforAcademicExcellenceintheprogram.SheisaCharteredFinancialAnalyst(CFA),anAssociateoftheCharteredInstituteofManagementAccountants(ACMA),CharteredGlobalManagementAccountant(CGMA)andaCertifiedFinancialRiskManager(FRM)oftheGlobalAssociationofRiskProfessionals.

HerpreviousworkexperienceincludesNDBIBandLehmanBrothersU.S.A.andshehasovertenyearsofcombinedexperienceintheinvestmentbankingandfundmanagementindustries.SheiscurrentlyaFundManageratNDBWMmanagingdiscretionaryfundsandtheunittrustproductrangeofferedbythecompany.

NDB SECURITIES (PvT) LTD18.Mr. Gihan R. CoorayVice President – Head of SalesMr.GihanCoorayjoinedNDBS12yearsagoandcurrentlyholdsthepositionofVicePresident-HeadofSales.HecommencedhiscareerasaResearchAnalystwithFirstCapitalDSASecuritiesandcountsover14yearsexperienceincapitalmarketservicesindustry.Heisspecialisedtoprovideinvestmentadvisoryservicestoforeignandlocalhighnetworth,corporateandinstitutionalclients.

NDB SECURITIES (PvT) LTD19.Mr. Jayantha SamarasingheAssistant Vice President - SalesMr.JayanthaSamarasingheisaveteraninthestockbrokingindustrywithover22yearsofexperienceinthebusiness.HejoinedNDBSin1994andafterholdingmyriadofpositionsinthecompanywaselevatedtothepositionofAVP–Salesin2010.



NDB SECURITIES (PvT) LTD20.Mr. Aroos FaleelAssistant Vice President - SalesAroosFaleeliscurrentlytheAssistantVice-President–Sales.Heisinchargeofbranchoperationsandtheretailteam.Hewasinstrumentalinsuccessfullysettingupthebranchnetwork.HejoinedNDBSin2000asaResearchAssistantandhasbeeninthestockbrokingandinvestmentadvisoryfieldforthepast22years.

NDB SECURITIES (PvT) LTD21.Ms. Surangi widanaarachchiAssistant Vice President - Finance and ComplianceSurangiWidanaarachchiJoinedNDBSin2003andiscurrentlyresponsiblefortheFinanceandCompliancefunctionsofthecompany.SheholdsaBScBusinessAdministration(Special)DegreefromtheUniversityofSriJayawardenepuraandisaCertifiedBusinessAccountantofICASL.Shecountsover13yearsofexperienceinthefieldoffinanceandcompliance.

NDB SECURITIES (PvT) LTD22.Mr. Nalin wickramatillekeAssistant Vice President - Information TechnologyNalinWickramatillekeJoinedNDBSin2009,andcurrentlyfunctionsastheHeadofIT.Hecountsover20yearsofexperienceinthefieldofinformationtechnologyrelatedtoStockbroking,Leasing,Shipping,GarmentmanufacturingandseveralotherIndustries.HeholdstheAssociateMemberstateoftheAustralianComputerSociety.

NDB SECURITIES (PvT) LTD23.Mr. Sidath KalyanaratneAssistant Vice President - Head of ResearchSidathservesastheHeadofResearch.HeholdsaBSc(Hons)DegreeinEngineeringfromUniversityofMoratuwa,SriLanka.HeisalsoanAssociateMemberofCIMA,UK.HestartedhiscareerwithNDBSin2008asaTrainee.Afterservingcloseto4yearsatNDBS,SidathjoinedAllianzInsuranceLankaLtdastheleadanalysttomanagetheLifeandGeneralInsurancefundsoftheSriLankansubsidiaryofAllianzSE,Germany.Hewasalsoresponsibleformanagingthetreasurydivisionofthetwocompanies.AfterleavingAllianz,SidathgainedglobalfrontierandemergingmarketexperienceinbothDubaiandAbuDhabi.HeiscurrentlyreadingforCFAandFRM.

NDB ZEPHYR PARTNERS LANKA (PvT) LTD.24.Mr. Mahesh AmarasiriPrincipalMr.AmarasiriisPrincipalofNDBZephyrPartners(Lanka)(Pvt)LtdHecountsover12yearsofexperienceinApparelManufacturing,InvestmentBankingandTelecommunicationIndustriesinmiddleandseniormanagerialpositions.PriortoJoiningNDBZephyrPartners(Lanka)(Pvt)Limited,heheldthepositionofHeadofStrategicPlanningatEtisalatLanka(Private)Limited,afullyownedsubsidiaryofEtisalat,UAE,wherehewasresponsibleforStrategicPlanning,NewBusinessDevelopment,SpecialProjectsandRegulatoryAffairs.Previously,heworkedatNDBInvestmentBank(NDBIB)asManagementAssociatewhereheworkedoncompanyvaluationsandmergersandacquisitions.HeheldthepositionofManagementAccountantatMASHoldings,oneofthelargestapparelexportersinSriLanka,beforejoiningNDBIB.MaheshholdsaB.ScDegree(SecondClassUpper)specialisinginElectricalEngineeringfromUniversityofMoratuwa,SriLanka,andanMBA.HeisaFellowMemberofTheCharteredInstituteofManagementAccountants(CIMA),UK,MemberofTheCharteredInstituteofMarketing(CIM),UKandaMemberofToastmasterInternational,U.S.A.HeisalsoaBoardMemberCIMASriLanka.


GRI CHECKLIST - G4

geNeral staNDarD DisClosuresgeNeral staNDarD DisClosures

DesCriptioN seCtioN iN tHe report page NumBer

STRATEGY AND ANALYSIS

G4-1 Statementfromthemostseniordecision-maker Chairman'sMessageandCEO'sReview

8-11and12-16

ORGANIZATIONAL PROFILE

G4-3 Nameoftheorganization. CorporateInformation- InnerBackCover

189

G4-4 Primarybrands,products,andservices WhatisInvestmentBanking andClose-up

17-20

G4-5 Locationoftheorganization’sheadquarters CorporateInformation-I nnerBackCover

189

G4-6 Numberofcountrieswheretheorganizationoperates WhatisInvestmentBanking andClose-up

17-20

G4-7 Natureofownershipandlegalform CorporateInformation- InnerBackCover

189

G4-8 Marketsserved WhatisInvestmentBanking andClose-up

17-20

G4-9 Scaleoftheorganisation WhatisInvestmentBankingandClose-upandFinancialReview

17-20and59-61

G4-10 Totalnumberofemployeesbyemploymentcontractandgender

SustainabilityinFocus-HumanCapital

84-85

G4-11 Percentageoftotalemployeescoveredbycollectivebargainingagreements.


88

G4-12 Organization’ssupplychain. SustainabilityinFocus-EconomicValueCreation

77

G4-13 Anysignificantchangesduringthereportingperiod WhatisInvestmentBankingandClose-upandManagementDiscussionandAnalysis-NCAPOperationalPerformance

17-20and36

G4-14 Precautionaryapproachorprincipleaddressed SustainabilityinFocus-ProductResponsibility

81

G4-15 Externallydevelopedeconomic,environmentalandsocialcharters,principles,orother

EconomicValueCreation 81

G4-16 Membershipsofassociations ManagementDiscussionandAnalysis

49and54




IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES

G4-17 Entitiesincludedintheorganization’sconsolidatedfinancialstatementsandreport.

ReportProfileandFinancialReview

3and 59-61

G4-18 Processfordefiningthereportcontentandaspectboundaries.

SustainabilityinFocus-MaterialityAnalysis 67-74

G4-19 MaterialAspectsidentifiedintheprocessfordefiningreportcontent.

G4-20 ForeachmaterialAspect,reporttheAspectBoundarywithintheorganization

G4-21 ForeachmaterialAspect,reporttheAspectBoundaryoutsidetheorganization

G4-22 Reporttheeffectofanyrestatementsofinformationprovidedinpreviousreports,andthereasonsforsuchrestatements.

ReportProfileandFinancialReview

3and 59-61

G4-23 SignificantchangesfrompreviousreportingperiodsintheScopeandAspectBoundaries ReportProfile 3

STAKEHOLDER ENGAGEMENT

G4-24 Stakeholdergroupsengagedbytheorganization

SustainabilityinFocus-StakeholderEngagement

63-66

G4-25 Basisforidentificationandselectionofstakeholderswithwhomto engage

G4-26 Organisation’sapproachtostakeholderengagement

G4-27 Keytopicsandconcernsthathavebeenraisedthroughstakeholderengagement,andtheorganisation'sresponse

GRI CHECKLIST - G4 (Contd.)




REPORT PROFILE

G4-28 Reportingperiod

ReportProfile

3

G4-29 Dateofmostrecentpreviousreport

G4-30 Reportingcycle

G4-31 Contactpointforquestionsregardingthereportoritscontents.

G4-32 ‘Inaccordance’optiontheorganizationhaschosen,GRIContentIndex,externalassurance

G4-33 Organisation’spolicyandcurrentpracticewithregardtoseekingexternalassuranceforthereport.

GOvERNANCE

G4-34 a.Reportthegovernancestructureoftheorganization,committeesandresponsibilities

SustainabilityinFocus-CorporateGovernance

103-110

ETHICS AND INTEGRITY

G4-56 Organization’svalues,principles,standardsandnormsofbehavioursuchascodesofconductandcodesofethics.

SustainabilityinFocus-EthicsandComplianceManagement

90-97

SPECIFIC STANDARD DISCLOSURES

DMA and Indicators

CATEGORY: ECONOMIC

MATERIALASPECT:ECONOMICPERFORMANCE

G4-DMA GenericDisclosuresonManagementApproachSustainabilityinFocus-EconomicValueCreation

75

G4-EC1 Directeconomicvaluegeneratedanddistributed 76

G4-EC3 Coverageoftheorganisation'sdefinedbenefitplanobligations 77

MATERIAL ASPECT: INDIRECT ECONOMIC IMPACTS

G4-DMA GenericDisclosuresonManagementApproach

SustainabilityinFocus-EconomicValueCreation

75

G4-EC7 Developmentandimpactofinfrastructureinvestmentsandservicessupported

78




CATEGORY: ENvIRONMENTAL

MATERIAL ASPECT: COMPLIANCE

G4-DMA GenericDisclosuresonManagementApproachSustainabilityinFocus-EnvironmentalInitiatives

83

G4-EN29 Monetaryvalueoffinesandtotalnumberofnon-monetarysanctionsfornon-compliancewithenvironmentallawsandregulations

CATEGORY: SOCIAL

SUB-CATEGORY: LABOR PRACTICES AND DECENT wORK

MATERIAL ASPECT: EMPLOYMENT



84

G4-LA1 Newemployeehiresandemployeeturnover 85-86

G4-LA2 Benefitsprovidedtofull-timeemployeesnotprovidedtotemporaryorpart-timeemployees

89

MATERIAL ASPECT: TRAINING AND EDUCATION



84,88

G4-LA9 Averagehoursoftrainingperyearperemployee 88

G4-LA10 Programmesforskillsmanagementandlifelonglearning 88

G4-LA11 Employeesreceivingregularperformanceandcareerdevelopmentreviews

87

MATERIAL ASPECT: DIvERSITY AND EqUAL OPPORTUNITY

G4-DMA GenericDisclosuresonManagementApproachSustainabilityinFocus-HumanCapital

84,85

G4-LA12 Compositionofgovernancebodiesandbreakdownofemployeesasperindicatorsofdiversity

85

MATERIAL ASPECT: EqUAL REMUNERATION FOR wOMEN AND MEN



84,87

G4-LA13 Ratioofbasicsalaryandremunerationofwomentomen 87





SUB-CATEGORY: HUMAN RIGHTS

MATERIAL ASPECT: NON-DISCRIMINATION

G4-DMA GenericDisclosuresonManagementApproach SustainabilityinFocus-HumanCapital

84,89

G4-HR3 Incidentsofdiscriminationandcorrectiveactionstaken 89

MATERIAL ASPECT: CHILD LABOR


84,89

G4-HR5 Operationsandsuppliersidentifiedashavingsignificantriskforincidentsofchildlabour,andmeasurestakentowardsaddressing

89

MATERIAL ASPECT: FORCED OR COMPULSORY LABOR


84,89

G4-HR6 Operationsandsuppliersidentifiedashavingsignificantriskforincidentsofforcedorcompulsorylabour,andmeasurestakento eliminate same

89

SUB-CATEGORY: SOCIETY

MATERIAL ASPECT: ANTI - CORRUPTION


SustainabilityinFocus-EthicsandComplianceManagement

90

G4-SO3 Operationsassessedforrisksrelatedtocorruptionandthesignificantrisksidentified

92

G4-SO4 Communicationandtrainingonanti-corruptionpoliciesandprocedures

92

G4-SO5 Confirmedincidentsofcorruptionandactionstaken 97

MATERIAL ASPECT: ANTI-COMPETITIvE BEHAvIOR

G4-DMA GenericDisclosuresonManagementApproachSustainabilityinFocus-EthicsandComplianceManagement

94

G4-SO7 Legalactionsforanti-competitivebehaviour,anti-trust,andmonopolypracticesandtheiroutcomes

94


G4-DMA GenericDisclosuresonManagementApproachSustainabilityinFocus-EthicsandComplianceManagement

97

G4-SO8 Finesandtotalnumberofnon-monetarysanctionsfornon-compliancewithlawsandregulations

97




SUB-CATEGORY: PRODUCT RESPONSIBILITY

MATERIAL ASPECT: PRODUCT AND SERvICE LABELING


SustainabilityinFocus-ProductResponsibility

80

G4-PR3 Typeofproductandserviceinformationrequiredbytheorganisation'sproceduresforproductandserviceinformation

80

G4-PR4 Incidentsofnon-compliancewithregulationsandvoluntarycodesconcerningproductandserviceinformation

82

MATERIAL ASPECT: CUSTOMER PRIvACY

G4-DMA GenericDisclosuresonManagementApproachSustainabilityinFocus-ProductResponsibility

80,81

G4-PR8 Substantiatedcomplaintsregardingbreachesofcustomerprivacyandlossesofcustomerdata

81



80,82

G4-PR9 Finesfornon-compliancewithlawsandregulationsconcerningtheprovisionanduseofproductsandservices

82

FINANCIAL SERvICES - SECTOR SPECIFIC ASPECTS

PRODUCT PORTFOLIO



80,81

G4-FS1 Policieswithspecificenvironmentalandsocialcomponents 81

G4-FS2 Proceduresforassessingandscreeningenvironmentalandsocial risks

81-82

AUDIT


81

G4-FS9 Auditstoassessimplementationofenvironmentalandsocialpoliciesandrisksassessmentprocedures

81-82

ACTIvE OwNERSHIP



81

G4-FS10 Interactionwithportfoliocompaniesonenvironmentalandsocial issues

81-82



goyour continued

confidence Will be the leverage upon

Which We Will create incredible change.


TheDirectorsofNDBCapitalHoldingsLimitedhavepleasureinpresentingtothememberstheirReporttogetherwiththeAuditedFinancialStatementsfortheyearended31stDecember2014.

REvIEw OF ACTIvITIESTheChairman’sMessage,theChiefExecutive’sReviewandManagementDiscussionandAnalysiscontainsadetaileddescriptionofoperationsoftheCompanyfortheyearended31stDecember2014.

PRINCIPAL ACTIvITIESTheprincipalactivitiesoftheCompanyanditssubsidiariesarefeebasedandfundbasedinvestmentbanking.Thefundbasedinvestmentbankingactivitiesincludeprivateequityinvestments,proprietarytrading,underwritingandinvestmentsinlistedequities,fixedincomesecurities,hybridsecuritiesandunittrusts.Feebasedactivitiesincludeinvestmentbanking,stockbroking,wealthmanagementandprivateequitymanagement,whicharecarriedoutthroughthesubsidiariesoftheCompany.

ANNUAL REPORT OF THE DIRECTORS ON THE STATE OF AFFAIRS OF NDB CAPITAL HOLDINGS LIMITED

DIRECTORS’ RESPONSIBILITY FOR FINANCIAL REPORTINGTheDirectorsareresponsibleforthepreparationoftheFinancialStatementsoftheCompanytoreflectatrueandfairviewofthestateofitsaffairs.TheDirectorsareoftheviewthattheseFinancialStatementshavebeenpreparedinconformitywiththerequirementsoftheSriLankaFinancialReportingStandards/SriLankaAccountingStandards,theCompaniesActNo7of2007,andtheListingRulesoftheColomboStockExchange.

TheDirectorsconsiderthat,inpreparingtheseFinancialStatements,suitableaccountingpolicieshavebeenusedwhichareappliedconsistentlyandsupportedbyreasonableandprudentjudgmentandthatallapplicableaccountingstandardshavebeenfollowed.TheFinancialStatementsarepreparedonagoingconcernbasis.TheDirectorsaresatisfiedthatallstatutorypaymentshavebeenmadeuptodate.

PROFITS AND APPROPRIATIONS

for tHe year eNDeD rs. (mNs)

group CompaNy 2014 2013 2014 2013

Netprofitafterchargingallexpenses 964 932 665 681

Add:accumulatedprofitbroughtforward 4,179 9,938 4,036 10,042

Appropriations

FinalDividendpaid(Gross)

(Y/E31-12.2013-Final) (280) - (280) -

(Y/E31-12.2012-Final) - (719) - (719)

ShareRepurchase - (5,968) - (5,968)

GoodwillWrite-off - (4) - -

NonControllingInterest (0) - - -

Accumulatedprofitcarriedforward 4,864 4,179 4,421 4,036


FINAL DIvIDENDTheCompanypaidafinaldividendofRs.8.50pershare,fortheyear2013.

RESERvESThetotalreservesoftheGroupamountedtoRs.5,203Mnasat31December2014,consistingoftheGeneralReserve (Rs.290Mn),AvailableforSaleReserve(Rs.50Mn)andRevenueReserve(Rs.4,864Mn).

ThetotalreservesoftheCompanyamountedtoRs.4,765Mnasat31December2014,consistingoftheGeneralReserve (Rs.290Mn),AvailableforSaleReserve(Rs.53Mn)andRevenueReserve(Rs.4,421Mn).TheStatementofChangesinEquityonpages141depictsthemovementsinreserves.

DONATIONSNodonationstoexternalcharitableorpoliticalorganizationsweremadebytheCompanyduringtheyearexceptforthefollowing:

TheCompanydonatedRs.2.5MntoNDBCapitalScholarshipTrustforthepurposeofextendingscholarshipstouniversitystudents.

POST BALANCE SHEET EvENTSOn26March2015,theBoardofDirectorsapprovedapaymentofRs.27.50pershareasafinaldividendfortheyear2014.Accordingly,thetotalamounttobepaidasdividendwouldamounttoRs.905Mn.Otherthantheaforementionedevents,therehavebeennoeventssubsequenttotheendofthereportingperiodthatrequiredisclosuretotheshareholdersoftheCompany.

SHARE CAPITAL/STATED CAPITALTheStatedCapitaloftheCompanyatthebeginningandendoftheyearunderreviewwasRs.1,328,880,070.

DIRECTORATECorporateInformationsectionofthisAnnualReportcarriesthenamesoftheBoardofDirectorsofNDBCapitalHoldingsLimitedasatdate.Inaddition,abriefresuméofeachoftheDirectorsisdepictedinpages112-113.

ThenamesoftheDirectorswhowereappointedin2014and2015andthosewhoresignedin2014arealsostatedtherein.

IntermsoftheprovisionsoftheArticlesofAssociationoftheCompany,onethirdoftheelectedDirectorsshallretirefromofficeandnewDirectorsappointedduringtheyearunderreviewandduringtheyear2015willbeelectedateachAnnualGeneralmeetingoftheCompany.Accordingly,Mr.SarathWikramanayakeandMs.AruniRajakarierwillretireandstandforre-electionbytheshareholdersoftheCompanyandMr.FaizanOzmanwillstandforre-appointmentbytheshareholdersoftheCompany.

NoneoftheDirectorsasat31stDecember2014heldanysharesintheCompanyasat31stDecember2014.

InteRest ReGIsteRTheCompanyaspertheCompaniesActNo.7of2007,maintainstheInterestRegister.AllDirectorsasat31stDecember2014havemadedeclarationsasprovidedforinSection192(2)oftheCompaniesActaforesaid.TherelatedentriesweremadeintheInterestRegisterduringtheyearunderreview.TheshareownershipofDirectorsisindicatedelsewhereinthisReport(Page180)EntriesweremadeintheInterestRegisteronDirector’sinterestincontracts,remunerationpaidtotheDirectorsetc.TheInterestRegisterisavailableforinspectionasrequiredundertheCompaniesAct.

Directors’interestsincontractsorproposedcontractswiththeCompany,bothdirectandindirectaredisclosedonpage131oftheAnnualReport.TheseinterestshavebeendeclaredatDirector’sMeetings.Asapractice,Directorshaverefrainedfromvotingonmattersinwhichtheyweremateriallyinterested.DirectorshavenodirectorindirectinterestinanyothercontractorproposedcontractwiththeCompany,exceptfortheinterestsdisclosedonpage131.

DIRECTORS’ REMUNERATIONDirectors’feesandemoluments,inrespectoftheCompanyforthefinancialyearended31stDecember2014amountedto Rs.3,900,000.


INSURANCE AND INDEMNITYTheCompanyhasnotup-todateobtainedindemnitiesandinsurancepoliciestocoverDirectors’liability.However,theDirectorsandOfficersinsurancepolicyofNationalDevelopmentBankPLCcoversDirectorsofsubsidiarycompaniesaswell.FurtherthesubsidiariesofNCAPhaveobtainedprofessionalindemnityinsurancecoveringtheprofessionalservicesrenderedatsubsidiarylevel.

MAJOR SHAREHOLDINGSThe20largestshareholdersoftheCompanyasat31stDecember2014aregivenonpage179togetherwithananalysisoftheshareholding.AsatthatdatetheCompanyhad198shareholders.

BOARD SUBCOMMITTEESMembersoftheboardsub-committeesasat31stDecember2014areasfollows;

iNvestmeNt CommitteeMr.MalingaArsakularatne-ChairmanMs.AruniRajakarierMr.RajendraTheagarajah

HumaN resourCes aND remuNeratioN CommitteeMsAruniRajakarier-ChairpersonMrAshokPathirageMrMalingaArsakularatne

auDit, risk aND CompliaNCe CommitteeMs.AruniRajakarier-ChairpersonMr.MalingaArsakularatneMr.SarathWikramanayake

APPLICATION OF THE CORPORATE GOvERNANCE RULES OF THE COLOMBO STOCK ExCHANGEAsperSection7oftheListingRulesoftheColomboStockExchangeonCorporateGovernance,itismandatoryforalllistedcompaniestopublishaTableintheAnnualReportconfirmingthattheCompanycomplieswiththeCorporateGovernanceRulessetoutintheaboveSectionandifnot,thereasonsfornon-compliance.Further,itismandatoryforalllistedcompaniestocomplywiththeaboveCorporateGovernanceRuleswitheffectfromthefinancialyearcommencingonorafter1stApril2008,andalsotoincludetherelevantaffirmativestatementsintheAnnualReport.

AlthoughtheCompanywasdelistedfromtheofficiallistoftheColomboStockExchangetheCompanyhasdecidedtoillustratetheCompany’scompliancewiththeaboveinviewofgoodgovernance.Accordingly,thestatusoftheCompany’scompliancewiththeListingRulesonCorporateGovernanceasat31stDecember2014istabulatedonpages106-110.

AUDITORSTheFinancialStatementsoftheCompanyfortheyearunderreviewhavebeenauditedbyMessrs.ErnstandYoung,CharteredAccountants.

FEES TO AUDITORSThefeespaidtoAuditorsduringtheyearwereRs.1,097,590forauditwork.

REAPPOINTMENT OF AUDITORSTheAuditorshaveindicatedtherewillingnesstoofferthemselvesforreappointmentfortheensuingyear.AresolutionappointingMessersErnst&YoungasAuditorsandauthorizingtheDirectorstofixtheirremunerationwillbeproposedattheAnnualGeneralMeeting.

ForandonbehalfoftheBoard

Ashok Pathirage vajira Kulatilaka Mayomi SamarawickramaChairman CEo/director Secretary to the Board

18thMay2015

ANNUAL REPORT OF THE DIRECTORS ON THE STATE OF AFFAIRS OF NDB CAPITAL HOLDINGS LIMITED (Contd.)


DIRECTORS’ INTEREST IN CONTRACTS wITH THE COMPANY

Name

relatioNsHip

aCCommoDatioN graNteD / Deposits

BalaNCe outstaNDiNg

as at 31 DeC 2014rs.000's

BalaNCe outstaNDiNg

as at 31 DeC 2013rs.000's

(a) Mr. A K Pathirage NationalDevelopmentBankPLC SoftlogicHoldingsPLC

DirectorChairman

DepositsandInvestmentsInvestments

22,821207,940

17,789

207,940

(b) Mr. R Theagarajah NationalDevelopmentBankPLC Director DepositsandInvestments 22,821

17,789

(c) Mr. D S P wickramanayake NationalDevelopmentBankPLC Director DepositsandInvestments 22,821 17,789


DIRECTORS’ STATEMENT ON INTERNAL CONTROLS OvER FINANCIAL REPORTING

RESPONSIBILITYTheBoardofDirectors(“Board”)isresponsiblefortheadequacyandeffectivenessoftheinternalcontrolmechanisminplaceatNDBCapitalHoldingsPLC,(“theCompany”)(De-listedon26thJanuary2015)

Inconsideringsuchadequacyandeffectiveness,theBoardrecognisesthatthebusinessrequiresrewardtobebalancedwithriskonamanagedbasisandassuchtheinternalcontrolsystemsareprimarilydesignedwithaviewtohighlightinganydeviationsfromthelimitsandindicatorswhichcomprisetheriskappetiteofthecompany.Inthislight,thesystemofinternalcontrolscanonlyprovidereasonable,butnotabsoluteassurance,againstmaterialmisstatementoffinancialinformationandrecordsoragainstfinanciallossesorfraud.

TheBoardhasestablishedanon-goingprocessforidentifying,evaluatingandmanagingthesignificantrisksfacedbytheCompanyandthisprocessincludesenhancingthesystemofinternalcontrolsoverfinancialreportingasandwhentherearechangestobusinessenvironmentorregulatoryguidelines.TheBoardhasassessedtheinternalcontroloverfinancialreportingtakingintoaccountprinciplesfortheassessmentofinternalcontrolsystemasgiveninthatguidance.

TheBoardisoftheviewthatthesystemofinternalcontrolsoverfinancialreportinginplaceissoundandadequatetoprovidereasonableassuranceregardingthereliabilityoffinancialreporting,andthatthepreparationoffinancialstatementsforexternalpurposesisinaccordancewithrelevantaccountingprinciplesandregulatoryrequirements.

ThemanagementassiststheBoardintheimplementationoftheBoard’spoliciesandproceduresonriskandcontrolbyidentifyingandassessingtherisksfacedandinthedesign,operationandmonitoringofsuitableinternalcontrolstomitigateandcontroltheserisks.

KEY FEATURES OF THE PROCESS ADOPTED IN APPLYING AND REvIEwING THE DESIGN AND EFFECTIvENESS OF THE INTERNAL CONTROL SYSTEM OvER FINANCIAL REPORTINGThekeyprocessesthathavebeenestablishedinreviewingtheadequacyandintegrityofthesystemofinternalcontrolswithrespecttofinancialreportingincludethefollowing:

▪ BoardAudit,RiskandComplianceCommitteeisestablishedbytheBoardtoassisttheBoardinensuringtheeffectivenessofCompany’sdailyoperationsandthattheCompany’soperationsareinaccordancewiththecorporateobjectivesandstrategiesaswellasthepoliciesandbusinessdirectionsthathavebeenapproved.

▪ TheInternalAuditDepartmentoftheNationalDevelopmentBankPLCchecksforcompliancewithpoliciesandproceduresandtheeffectivenessoftheinternalcontrolsystemsonafrequencyagreedwiththeBoardAudit,RiskandComplianceCommittee.FindingsoftheInternalAuditDepartmentaresubmittedtotheBoardAudit,RiskandComplianceCommitteeforreviewattheirperiodicmeetings.

▪ TheBoardAudit,RiskandComplianceCommitteeoftheCompanyreviewsinternalcontrolissuesidentifiedbytheInternalAuditDepartment,regulatoryauthoritiesandmanagement,andevaluatetheadequacyandeffectivenessoftheriskmanagement,complianceandinternalcontrolsystems.Theyalsoreviewtheinternalauditfunctionswithparticularemphasisonthescopeofauditsandqualityofinternalaudits.TheminutesoftheBoardAudit,RiskandComplianceCommitteemeetingsareforwardedtotheBoardoftheCompanyonaperiodicbasis.FurtherdetailsoftheactivitiesundertakenbytheAudit,RiskandComplianceCommitteeoftheCompanyaresetoutintheAudit,RiskandComplianceCommitteeReportonpages134-136.


▪ TheCompanyadoptedthenewSriLankaAccountingStandardscomprisingLKASandSLFRSin2012.Theprocessesandproceduresinitiallyappliedtoadopttheaforementionedaccountingstandardswerefurtherstrengthenedduringtheyear2013and2014basedonthefeedbackreceivedfromtheexternalauditors,Internalauditdepartment,regulatorsandtheBoardAudit,RiskandComplianceCommittee.

CONFIRMATIONBasedontheaboveprocesses,theBoardconfirmsthatthefinancialreportingsystemoftheCompanyhasbeendesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesandhasbeendoneinaccordancewithSriLankaAccountingStandards.

ByorderoftheBoard

A.K.PathirageChairman

Aruni RajakarierChairman Audit Committee

vajira KulatilakeChief Executive officer

18thMay2015


REPORT OF BOARD, AUDIT, RISK AND COMPLIANCE COMMITTEE

COMPOSITION OF THE COMMITTEETheBoardAudit,RiskandComplianceCommitteeofNDBCapitalHoldingsPLC(de-listedon26thJanuary2015)comprisedofthreeNon-ExecutiveDirectorsasattheendoftheyear2014.Subsequenttode-listingthenameofNDBCapitalHoldingsPLC(“theCompany”)changedtoNDBCapitalHoldingsLtdwitheffectfrom2ndMarch2015

TheChairpersonoftheCommittee,Mrs.AruniRajakarierisanIndependentNon-ExecutiveDirectorandanAssociateMemberoftheInstituteofCharteredAccountantsofSriLanka,whiletheothermembersoftheCommitteearealsofromaspecialistfinancial/auditingbackground.

TheStructureandCompositionoftheBoardAudit,RiskandComplianceCommitteefortheyear2014andtheattendanceofeachDirectorissetoutinthetablebelow.

Name of tHe DireCtor iNDepeNDeNt/ NoN iNDepeNDeNt uNDer iCasl/seC DireCtioNs

No. of meetiNgs atteNDeD / sCHeDuleD

Mrs.AruniRajakarier Independent 4/4

Mr.SarathWikramanayake

Non-Independent 3/4

Mr.MalingaArsakularatne

Independent 3/4

TheGroupInternalAuditorfunctionsastheSecretarytotheCommittee.

PURPOSE AND TERMS OF REFERENCETheCharteroftheBoardAudit,RiskandComplianceCommitteeclearlydefinestheTermsofReferenceoftheCommittee.TheCharterwasapprovedbytheBoardofDirectorsinOctober2013.

TheBoardAudit,RiskandComplianceCommitteeisresponsibletotheBoardofDirectorsinitsgeneraloversightoffinancialreporting,internalcontrol,riskmanagementandcompliance.TheCommitteereportstotheBoardofDirectorsonitsactivitiesregularly.ThisReportfocusesontheactivitiesoftheCommitteefortheyearunderreview.

Thecompositionrequirements,rolesandfunctionsoftheCommitteearesetoutin“RulesonCorporateGovernanceundertheListingRulesoftheColomboStockExchange”andthe“CodeofBestPracticeonCorporateGovernance”issuedjointlybytheInstituteofCharteredAccountantsofSriLankaandtheSecuritiesandExchangeCommissionofSriLanka.

MEETINGSTheCommitteemetfourtimesduringtheyear.Minutesofsuchmeetings,whichincludeadequatedetailsofthemattersdiscussedarereportedregularlytotheBoardofDirectors.

OntheinvitationoftheCommittee,thecompany’sExternalAuditors,Messrs.’,ErnstandYoungattendedallmeetingsduringtheyear.

Inaddition,theChiefExecutiveOfficer,theChiefOperatingOfficerandtheHeadofComplianceoftheCompanyandtheChiefExecutiveOfficer,VicePresident–GroupRiskManagementandVicePresident–FinanceofNDBhaveattendedthemeetingsaspermanentinvitees.TheChiefExecutiveOfficersoftherespectivesubsidiarycompanieswerealsoinvitedtoparticipateinthemeetingsasandwhenthenecessityarose.

FINANCIAL REPORTINGTheCommitteeassiststheBoardtodischargetheirresponsibilityinthepreparationofFinancialStatementsthatevidenceatrueandfairviewonfinancialpositionandperformanceinaccordancewiththeCompany’saccountingrecordsandasperthestipulatedrequirementsoftheSriLankaAccountingStandards.TheCommitteereviews:

▪ TheadequacyandeffectivenessoftheInternalControlSystemsandProcedurestoprovidereasonableassurancethatalltransactionsareaccuratelyandcompletelyrecordedinthebooksofaccount.

▪ TheeffectivenessoftheFinancialReportingSystemsinplacetoensurereliabilityoftheinformationprovidedtothestakeholders.


▪ TheCompany’sfinancialstatementsandaccountingpoliciesandpractices.

▪ TheprocessesbywhichcompliancewithSriLankaAccountingStandards(SLFRS/LKAS)andotherregulatoryprovisionsrelatingtofinancialreportinganddisclosuresareensured.

▪ TheAnnualReportandAccounts,andtheInterimFinancialStatementstogetherwiththepressreleasespriortosubmissiontotheBoard.

HavingassessedtheprevailingSystemofInternalControlsandProcedures,theCommitteeisoftheviewthatadequatecontrolsandproceduresareinplacetoprovidereasonableassurancethattheCompany’sassetsaresafeguardedandthatthefinancialpositionofthecompanyiswellmonitoredandaccuratelyreported.

RISKS AND INTERNAL CONTROLSDuringtheyear,theCommitteereviewedtheeffectivenessoftheInternalControlSystemsoftheCompanyanditssubsidiariesandbi-annualconfirmationsprovidedbytherespectiveCEOsontheinternalcontrolenvironmentoftheirrespectivecompanies.

INTERNAL AUDITDuringtheyear,theCommitteereviewedtheindependence,objectivityandperformanceoftheinternalauditfunctionandtheadequacyofresources.TheauditplanfortheCompanywasapprovedbytheCommitteeandthefindingsoftheinternalauditscompletedandtheirevaluationofrespectivecompany’sInternalControlSystemswerereviewedbytheCommittee.

DuringthethirdquarteroftheyeartheCommitteereviewedandapprovedtheGroupAuditPolicyofNDBCapitalHoldingsPLCanditssubsidiaries.

TheCommitteealsoreviewedupdatesonauditactivitiesandtheadequacyofcoverageoftheapprovedauditplan,theresultsofanyunsatisfactoryaudits,theactionplantoaddresstheseareasandtheimplementationstatus.Auditfindingspresentedinthereportsareprioritizedbasedonthelevelofrisk.

INTERNAL AUDIT CHARTER AND MANUALTheinternalauditfunctionisgovernedbytheInternalAuditCharterwhichdefinesthescope,functions,authority,responsibility,reporting,externalrelationshipmanagementandethicsthatassistanddirect/guidetheInternalAuditDepartmenttodischargeitsfunctionindependently.

ExTERNAL AUDITTheCommitteeissatisfiedthattheindependenceoftheExternalAuditorshasnotbeenimpairedbyanyeventorservicethatgivesrisetoaconflictofinterest.Dueconsiderationhasbeengiventothelevelofauditandnon-auditfeesreceivedbytheExternalAuditorsfromtheNDBGroupandconfirmationhasbeenreceivedfromtheExternalAuditorsoftheircompliancewiththeindependencecriteriagivenintheCodeofEthicsoftheInstituteofCharteredAccountantsofSriLanka.

TheperformanceoftheExternalAuditorshasbeenevaluatedanddiscussedandtheCommitteehasrecommendedtotheBoardthatMessrs.’Ernst&Youngbere-appointedastheExternalAuditorsofNDBCapitalHoldingsLtdforthefinancialyearending31stDecember2015,subjecttotheapprovalbytheshareholdersattheAnnualGeneralMeeting.

TheCommitteereviewedtheauditedFinancialStatementswiththeExternalAuditor,whoisresponsibleforexpressinganopiniononitsconformitywiththeSriLankaAccountingStandards.

RISK MANAGEMENTTheCommitteereviewedtheRiskManagementprocessesfollowedbyNDBGroupRiskManagementDepartmentinrespectofNCAPGroupandreviewedtheRiskAssessmentReportspreparedfortheCompanyanditssubsidiariesincludingthefive(05)keyriskstothecompanieswiththemitigantsidentifiedasat31stDecember2014.

REGULATORY COMPLIANCETheCommitteecloselyscrutinizescompliancewiththerequirementsspecifiedbytheSecuritiesandExchangeCommissionofSriLanka(SEC)andtheColomboStockExchange(CSE)andtheSystemsandProceduresinplacetoensurecompliancewithsuchregulatoryrequirements.


ThequarterlycompliancereportsubmittedbytheHeadofComplianceisreviewedbytheCommitteetodeterminethelevelofcompliancewithalllegalandstatutoryrequirements.

EvALUATION OF THE COMMITTEEAsauthorizedbytheBoard,theBoardAudit,RiskandComplianceCommitteecarriedoutaformalself-evaluation/appraisalontheeffectivenessoftheCommittee.ReportwiththeresultsoftheSelf-AssessmentwassubmittedtotheothermembersoftheBoardfortheirreviewandtheBoardconcurredthattheCommitteehadcarriedoutitsresponsibilitiesinasatisfactorymanner.

Aruni RajakarierChairperson

18thMay2015

REPORT OF BOARD, AUDIT, RISK AND COMPLIANCE COMMITTEE (Contd.)


INDEPENDENT AUDITORS’ REPORT

TO THE SHAREHOLDERS OF NDB CAPITAL HOLDINGS LIMITED

report oN tHe fiNaNCial statemeNtsWehaveauditedtheaccompanyingfinancialstatementsofNDBCapitalHoldingLimited,(FormallyknownasNDBCapitalHoldingPLC)(“theCompany”),andtheconsolidatedfinancialstatementsoftheCompanyanditssubsidiaries(“Group”),whichcomprisethestatementoffinancialpositionasat31December2014,andthestatementofprofitorlossandcomprehensiveincome,statementofchangesinequityand,statementofcashflowfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation.

BoarD’s respoNsiBility for tHe fiNaNCial statemeNtsTheBoardofDirectors(“Board”)isresponsibleforthepreparationofthesefinancialstatementsthatgiveatrueandfairviewinaccordancewithSriLankaAccountingStandards,andforsuchinternalcontrolsasBoarddeterminesisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

auDitor’s respoNsiBilityOurresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithSriLankaAuditingStandards.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,including the assessment of the risks of material misstatement of thefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationofthefinancialstatementsthatgiveatrueandfairviewinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternal

control.AnauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebyBoard,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.

opiNioNInouropinion,theconsolidatedfinancialstatementsgiveatrueandfairviewofthefinancialpositionoftheGroupasat31December2014,andofitsfinancialperformanceandcashflowsfortheyearthenendedinaccordancewithSriLankaAccountingStandards.

report oN otHer legal aND regulatory requiremeNtsAsrequiredbySection163(2)oftheCompaniesActNo.7of2007,westatethefollowing:a) Thebasisofopinion,ScopeandLimitationsoftheauditare

asstatedabove.b) Inouropinion:

▪ Wehaveobtainedalltheinformationandexplanationsthatwererequiredfortheauditand,asfarasappearsfromourexamination,properaccountingrecordshavebeenkeptbytheCompany,

▪ ThefinancialstatementsoftheCompanygiveatrueandfairviewofthefinancialpositionasat31December2014,andofitsfinancialperformanceandcashflowsfortheyearthenendedinaccordancewithSriLankaAccountingStandards,and

▪ ThefinancialstatementsoftheCompanyandtheGroup,complywiththerequirementsofSection151and153oftheCompaniesActNo.07of2007.

(Sgd.)Ernst & YoungCharteredAccountants18thMay2015Colombo

138 | NDB Capital Holdings PLC | Annual Report 2014

INCOME STATEMENT

Group CompanyFor the year ended 31 December Note 2014 2013 Change 2014 2013 Change Rs.'000 Rs.'000 % Rs.'000 Rs.'000 %

InterestIncome 3 230,649 160,444 44 147,219 128,962 14DividendIncome 4 37,340 41,479 (10) 67,127 61,558 9EquityIncome 5 189,772 33,507 466 189,772 33,507 466OtherIncome 6 959,177 1,233,606 (22) 351,008 560,304 (37)Total Operating Income 1,416,937 1,469,036 (4) 755,126 784,331 (4)

Operating ExpensesPersonnelExpenses 7 (266,005) (261,248) 2 (54,483) (58,239) (6)AdministrativeandOtherOperatingExpenses 8 (251,229) (176,274) 43 (59,563) (22,960) 159Total Operating Expenses (517,234) (437,522) 18 (114,046) (81,199) 40ShareofAssociateCompany’sProfit 59,166 - 100 - - -Profit Before Tax 958,869 1,031,514 (7) 641,080 703,132 (9)Taxation 9 5,430 (99,460) (105) 23,783 (21,916) (209)Profit for the Year 964,299 932,054 3 664,863 681,216 (2)

Attributable to:EquityHoldersoftheParent 964,378 932,054 3 664,863 681,216 (2)Non-ControllingInterest (79) - 100 - - - 964,299 932,054 3 664,863 681,216 (2)EarningsPerShare(Rs.) 10 29.31 26.15 12 20.21 19.11 6DividendsPerShare(Rs.) 11 - - - 27.50 8.50 224

Statement of Comprehensive IncomeProfit for the Year 964,299 932,054 3 664,863 681,216 (2)

Other Comprehensive Income / (Expenses)NetGainsonAvailable-for-SaleInvestments 9,500 61,035 (84) 9,500 61,035 (84)ActuarialGains/(Losses)onDefinedBenefitPlans (13,953) 10,212 (237) - - -Total Other Comprehensive Income /(Expenses ) (4,453) 71,247 (106) 9,500 61,035 (84)Less:TaxExpensesrelatingtoComponentsofOther ComprehensiveIncome - (17,090) (100) - (17,090) (100)Total Other Comprehensive Income /(Expenses ), net of Taxes (4,453) 54,157 (108) 9,500 43,945 (78)Total Comprehensive Income for the Year 959,846 986,211 (3) 674,363 725,161 (7)

Attributable to:EquityHoldersoftheParent 959,925 986,211 (3) 674,363 725,161 (7)Non-ControllingInterest (79) - 100 - - - 959,846 986,211 (3) 674,363 725,161 (7)

TheAccountingPoliciesandNotesonpages143through176formanintegralpartoftheFinancialStatements.


STATEMENT OF FINANCIAL POSITION

Group CompanyAs at 31 December Note 2014 2013 Change 2014 2013 Change Rs.'000 Rs.'000 % Rs.'000 Rs.'000 %

AssetsNon-Current AssetsProperty,PlantandEquipment 12 61,616 35,458 74 11,743 704 1,568InvestmentinSubsidiaries 13 - - - 995,080 995,080 -InvestmentinAssociate 14 788,556 - 100 729,390 - 100DeferredTaxAsset 15 27,880 8,532 227 12,340 - 100IntangibleAssets 16 47,641 35,481 34 283 309 (8)OtherNonCurrentFinancialAssets 17 1,490,862 1,073,342 39 1,067,707 780,615 37Total Non Current Assets 2,416,555 1,152,813 110 2,816,543 1,776,708 59

Current AssetsTradeandOtherReceivables 19 661,534 804,100 (18) 113,570 13,305 754IncomeTaxReceivable 23,727 - 100 14,787 - 100OtherFinancialInvestmentsclassified asLoansandReceivables 20 386,283 959,120 (60) 381,048 855,517 (55)FinancialInvestments-HeldforTrading 21 3,243,280 3,469,787 (7) 2,827,158 3,079,406 (8)CashandBankBalances 22 194,874 156,917 24 22,936 20,309 13Total Current Assets 4,509,698 5,389,924 (16) 3,359,499 3,968,537 (15)Total Assets 6,926,253 6,542,737 6 6,176,042 5,745,245 7

EqUITY AND LIABILITIESEquity Attributable to Equity Holders of the ParentStatedCapital 23 1,328,880 1,328,880 - 1,328,880 1,328,880 -Reserves 339,429 343,882 (1) 343,170 333,670 3RetainedEarnings 4,863,653 4,178,967 16 4,421,463 4,036,292 10 6,531,962 5,851,729 12 6,093,513 5,698,842 7Non-ControllingInterest (79) - 100 - - -Total Equity 6,531,883 5,851,729 12 6,093,513 5,698,842 7

Non-Current LiabilitiesEmployeeBenefitLiabilities 24 43,091 28,338 52 2,914 1,719 70DeferredTaxLiability 18,335 20,550 (11) 17,090 17,090 -Total Non-Current Liabilities 61,426 48,888 26 20,004 18,809 6


Group CompanyAs at 31 December Note 2014 2013 Change 2014 2013 Change Rs.’000 Rs.’000 % Rs.’000 Rs.’000 %

Current LiabilitiesOtherPayables 25 315,950 577,540 (45) 62,525 25,169 148BankOverdrafts 1,867 16,281 (89) - - -IncomeTaxPayable 15,127 48,299 (69) - 2,425 (100)Total Current Liabilities 332,944 642,120 (48) 62,525 27,594 127Total Liabilities 394,370 691,008 (43) 82,529 46,430 78Total Equity and Liabilities 6,926,253 6,542,737 6 6,176,042 5,745,245 7

TheseFinancialStatementsareincompliancewiththerequirementsoftheCompaniesActNo.7of2007.

Dhanan Senathirajah Faizan OzmanVice President - Finance & Planning Group Chief Financial officer NationalDevelopmentBankPLC NationalDevelopmentBankPLC

TheBoardofDirectorsisresponsibleforthepreparationandpresentationoftheseFinancialStatements.SignedforandonbehalfoftheBoardby,

Ashok Pathirage vajira Kulatilaka Mayomi SamarawickramaChairman CEo / director Company Secretary


18thMay2015Colombo

STATEMENT OF FINANCIAL POSITION (Contd.)


STATEMENT OF CHANGES IN EqUITY

Attributable to the Parent non For the year ended 31 December Stated General Available For Retained Controlling Group Capital Reserves Sale Reserves Earnings Total Interest Total Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Balance as at 1 January 2013 1,328,880 289,725 - 9,938,268 11,556,873 - 11,556,873

Total Comprehensive Income for the YearProfitfortheYear - - - 932,054 932,054 - 932,054Dividendspaid - - - (719,222) (719,222) - (719,222)ShareRepurchase - - - (5,967,791) (5,967,791) - (5,967,791)Goodwillwrite-off - - - (4,342) (4,342) - (4,342)OtherComprehensive Income/(Expenses),netofTax - - 54,157 - 54,157 - 54,157Balance as at 31 December 2013 1,328,880 289,725 54,157 4,178,967 5,851,729 - 5,851,729

Balanceasat01January2014 1,328,880 289,725 54,157 4,178,967 5,851,729 - 5,851,729Total Comprehensive Income for the YearProfitfortheYear - - - 964,378 964,378 (79) 964,299Dividendspaid - - - (279,692) (279,692) - (279,692)OtherComprehensive Income/(Expenses),netofTax - - (4,453) - (4,453) - (4,453)Balance as at 31 December 2014 1,328,880 289,725 49,704 4,863,653 6,531,962 (79) 6,531,883

non For the year ended 31 December Stated General Available For Retained Controlling Company Capital Reserves Sale Reserves Earnings Total Interest Total Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Balance as at 1 January 2013 1,328,880 289,725 - 10,042,089 11,660,694 - 11,660,694

Total Comprehensive Income for the YearProfitfortheYear - - - 681,216 681,216 - 681,216DividendsPaid - - - (719,222) (719,222) - (719,222)ShareRepurchase - - - (5,967,791) (5,967,791) - (5,967,791)OtherComprehensive Income/(Expenses),netofTax - - 43,945 - 43,945 - 43,945Balance as at 31 December 2013 1,328,880 289,725 43,945 4,036,292 5,698,842 - 5,698,842

Balanceasat01January2014 1,328,880 289,725 43,945 4,036,292 5,698,842 - 5,698,842Total Comprehensive Income for the YearProfitfortheYear - - - 664,863 664,863 - 664,863DividendsPaid - - - (279,692) (279,692) - (279,692)OtherComprehensive Income/(Expenses),netofTax - - 9,500 - 9,500 - 9,500Balance as at 31 December 2014 1,328,880 289,725 53,445 4,421,463 6,093,513 - 6,093,513



CASH FLOwS STATEMENT

Group CompanyYear ended 31 December 2014 2013 2014 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Cash Flows From / (Used in) Operating Activities ProfitBeforeTax 958,869 1,031,514 641,080 703,132

Adjustmentsfor ShareofProfitoftheAssociate (59,166) - - - Depreciation/Amortisation 37,948 30,869 1,827 176 IncomefromInvestments (353,843) (771,413) (338,612) (621,862) ProfitfromSaleofEquityInvestments (269,295) (33,507) (269,295) (33,507) ProvisionforBad/DoubtfulDebts 166 (456) - - ProvisionforDefinedBenefitPlans 8,040 (8,572) 1,195 1,719Operating Profit/(Loss) before working Capital Changes 322,719 248,435 36,195 49,658 (Increase)/DecreaseinTradeandOtherReceivables 142,566 (556,199) (100,265) 47,859 Increase/(Decrease)inTradeandOtherPayables (261,590) 541,495 37,356 18,582Cash Flows Generated from Operations 203,695 233,731 (26,714) 116,099 DefinedBenefitPlanCostsPaid (4,778) (1,008) - - IncomeTaxPaid (71,710) (55,061) (6,520) (18,215)Net Cash From/(Used in) Operating Activities 127,207 177,662 (33,234) 97,884

Cash Flows from / (Used in) Investing Activities NetProceedsfromSale/(Purchase)ofInvestments 267,276 1,021,091 298,805 (143,037) AcquisitionofProperty,PlantandEquipment (46,347) (6,870) (12,840) (558) AcquisitionofIntangibleAssets (29,894) (2,767) - (380) NetInvestmentinFinancialAssets (254,168) 5,358,108 (184,758) 6,581,014 InterestReceived 230,649 169,546 147,219 125,900 DividendReceived 37,340 35,422 67,127 46,835Net Cash Flows from/(Used in) Investing Activities 204,856 6,574,530 315,553 6,609,774

Cash Flows from / (Used in) Financing Activities DividendsPaid (279,692) (719,222) (279,692) (719,222) ShareRepurchase - (5,967,791) - (5,967,791)Net Cash Flows from/(Used in) Financing Activities (279,692) (6,687,013) (279,692) (6,687,013)

Net Increase/(Decrease) in Cash and Cash Equivalents 52,371 65,179 2,627 20,645

Cash and Cash Equivalents at the beginning of the Year 140,636 75,457 20,309 (336)Cash and Cash Equivalents at the end of the Year * 193,007 140,636 22,936 20,309

*CASH AND CASH EqUIvALENTSFavourable Cash and Cash Equivalents BalanceShortTermDeposits 138,126 95,004 - -CashandBankBalances 56,748 61,913 22,936 20,309 194,874 156,917 22,936 20,309Unfavourable Cash and Cash Equivalent BalancesBankOverdraft (1,867) (16,281) - -Total Cash and Cash Equivalents for the Purpose of Cash Flow Statement 193,007 140,636 22,936 20,309



NOTES TO THE FINANCIAL STATEMENTS

1.0 CORPORATE INFORMATIONNDBCapitalHoldingsPLC(“NCAP”or“theCompany”)isacompanywhichoffersfull-serviceinvestmentbankingservicescomprisingoffeebasedactivitiessuchasdebtandequityraising,corporateadvisory,mergersandacquisitions,stockbroking,wealthmanagementandfundbasedactivitiessuchasinvestmentinlistedequitysecurities,privateequity,fixedincomesecuritiesandunderwriting.ThefeebasedactivitiesarecarriedoutviasubsidiariesofNCAPwhereasfundbasedactivitiesareperformeddirectlyundertheCompany.

NationalDevelopmentBankPLCistheultimateparentoftheGroup.NCAPisalistedlimitedliabilitycompanyincorporatedanddomiciledinSriLanka.ItsregisteredofficeisatNo.40,NawamMawatha,Colombo2,SriLanka.

TheFinancialStatementsofNDBCapitalHoldingsPLCfortheyearended31December2014wasauthorizedforissueinaccordancewitharesolutionoftheBoardofDirectorson 18thMay2015.

2. ACCOUNTING POLICIES2.1 Basis of preparatioNTheconsolidatedfinancialstatementshavebeenpreparedonahistoricalcostbasis,exceptforthefollowingmaterialitemsinthestatementofFinancialPosition,

▪ Otherfinancialassetsandliabilitiesheldfortradingwhichare measured at fair value

▪ Liabilitiesfordefinedbenefitobligationswhicharerecognizedatthepresentvalueofthedefinedbenefitobligationslessthenettotalsofplanassets andunrecognizedpastservicecost.

2.1.1 Functional and Presentation CurrencyTheconsolidatedfinancialstatementsarepresentedinSriLankanRupeesandallvaluesareroundedtothenearestthousandrupees,exceptwhenotherwiseindicated.

2.1.2 Statement of ComplianceTheStatementoffinancialPosition,Statementofcomprehensiveincome,statementofChangesinequityandstatementofCashflowstogetherwithAccountingpolicies

andnotes,(FinancialStatements),i.econsolidatedFinancialStatementsofNCAPGroupasat31December2014andfortheyearthenended,havebeenpreparedinaccordancewithSriLankaAccountingStandards(SLFRSandLKASs)issuedbytheInstituteofCharteredAccountantsofSriLanka.ThepreparationandpresentationoftheseFinancialStatementsareincompliancewiththeCompaniesActNo.07of2007.

2.1.3 Materiality and AggregationIncompliancewithSriLankaAccountingStandards-LKAS01onPresentationofFinancialStatements,eachmaterialclassofsimilaritemsispresentedseparatelyintheFinancialStatements.Itemsofdissimilarnatureorfunctionsarepresentedseparately,unlesstheyareimmaterial.

FinancialassetsandfinancialliabilitiesareoffsetandthenetamountreportedintheConsolidatedStatementofFinancialPositiononlywhenthereisalegallyenforceablerighttooffsettherecognizedamountsandthereisanintentiontosettleonanetbasis,ortorealizetheassetsandsettletheliabilitysimultaneously.

IncomeandexpensesarenotoffsetintheConsolidatedIncomeStatementunlessrequiredorpermittedbyanyaccountingstandardorinterpretation,andasspecificallydisclosedintheAccountingPoliciesoftheCompany.

Basis of ConsolidationTheconsolidatedfinancialstatementscomprisethefinancialstatementsoftheCompanyanditssubsidiariesfortheyearended31December2014.ThefinancialstatementsofNDBCapitalHoldingsPLC’ssubsidiariesarepreparedforthesamereportingyearasNDBCapitalHoldingsPLC,usingconsistentaccountingpolicies.

Allintra-groupbalances,incomeandexpensesandunrealisedgainsandlossesresultingfromintra-grouptransactionsareeliminatedinfullinpreparingtheConsolidatedFinancialStatements.

SubsidiariesarefullyconsolidatedfromthedateonwhichcontrolistransferredtotheCompany.Non-controllinginterestsrepresenttheportionofprofitorlossandnetassetsofsubsidiariesnotowned,directlyorindirectly,byCompany.


Non-controllinginterestsarepresentedseparatelyintheConsolidatedIncomeStatementandwithinequityintheConsolidatedStatementofFinancialPosition,butseparatefromParentshareholders’equity.

2.2 sigNifiCaNt aCCouNtiNg juDgmeNts, estimates aND assumptioNs

Intheprocessofapplyinggroup’saccountingpolicies,managementisrequiredtomakejudgments,whichmayhavesignificanteffectsontheamountsrecognizedintheFinancialStatements.Further,managementisalsorequiredtoconsiderkeyassumptionsconcerningthefutureandotherkeysourcesofestimationuncertaintyattheStatementoftheFinancialpositiondatethathavesignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyear.Actualresultsmaydifferfromtheseestimates.

Thekeysignificantaccountingjudgments,estimatesandassumptionsinvolvinguncertaintyarediscussedbelow,whereastherespectivecarryingamountsofsuchassetsandliabilitiesareasgiveninrelatedNotes.

Going ConcernTheBoardofDirectorsoftheCompanyhasmadeanassessmentofitsabilitytocontinueasagoingconcernandissatisfiedthatithastheresourcestocontinueinbusinessfortheforeseeablefuture.Furthermore,BoardofDirectorsisnotawareofanymaterialuncertaintiesthatmaycastsignificantdoubtupontheCompany’sabilitytocontinueasagoingconcern.Therefore,theFinancialStatementscontinuetobepreparedonthegoingconcernbasis.

Impairment of Available for Sale InvestmentsTheGroupreviewit’sdebtsecuritiesclassifiedasavailableforsaleinvestmentsateachreportingdatetoassesswhethertheyareimpaired.Thisrequiressimilarjudgmentasappliedtotheindividualassessmentofloansandadvances.

TheCompanyalsorecordsimpairmentchargesonavailableforsaleequityinvestmentswhentherehasbeenasignificantorprolongeddeclineinthefairvaluebelowtheircost.The

determinationofwhatis‘significant’or‘prolonged’requiresjudgment.Inmakingthisjudgment,theCompanyevaluates,amongotherfactors,historicalsharepricemovementsanddurationandextenttowhichthefairvalueofaninvestmentislessthanitscost.

Deferred Tax AssetsDeferredtaxassetsarerecognizedinrespectoftaxlossestotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichsuchitemscanbedeductedinthefuture.Significantmanagementjudgmentisrequiredtodeterminetheamountofdeferredtaxassetsthatcanberecognized,baseduponthelikelytimingandleveloffuturetaxableprofitstogetherwithfuturetaxplanningstrategies.

Defined Benefit PlansThecostofthedefinedbenefitplans(gratuityandpensionplan)isdeterminedusinganactuarialvaluation.Theactuarialvaluationinvolvesmakingvariousassumptionswhichmaydifferfromactualdevelopmentsinthefuture.Theseincludethedeterminationofdiscountrates,expectedratesofreturnonassets,futuresalaryincreases,mortalityratesandfuturepensionincreases.Duetothelong–termnatureoftheseplans,suchestimatesaresubjecttosignificantuncertainty.Allassumptionsarereviewedateachreportingdate.

Indeterminingtheappropriatediscountrate,managementconsiderstheinterestratesofSriLankaGovernmentbondswithextrapolatedmaturitiescorrespondingtotheexpecteddurationofthedefinedbenefitobligation.

Themortalityrateisbasedonpubliclyavailablemortalitytables.FuturesalaryincreasesandpensionincreasesarebasedonexpectedfutureinflationratesandexpectedfuturesalaryincreaserateoftheCompany.

Useful Life time of Property, Plant and EquipmentsThegroupreviewstheresidualvalues,usefullivesandmethodsofdepreciationofproperty,Plantandequipmentateachreportingdate.Judgementofthemanagementisexercisedintheestimationofthesevalues,rates,methodsandhencetheyaresubjecttouncertainty.

NOTES TO THE FINANCIAL STATEMENTS (Contd.)


Commitments and contingenciesAlldiscerniblerisksareaccountedforindeterminingtheamountofallknownliabilities.

Contingentliabilitiesarepossibleobligationswhoseexistencewillbeconfirmedonlybyuncertainfutureeventsorpresentobligationswherethetransferofeconomicbenefitisnotprobableorcannotbereliablymeasured.ContingentliabilitiesarenotrecognisedintheStatementofFinancialPositionbutaredisclosedunlesstheyareremote.

2.3 summary of sigNifiCaNt aCCouNtiNg poliCies2.3.1 Financial instruments – initial recognition and subsequent

measurement (a) Date of recognition

Allfinancialassetsandliabilitiesareinitiallyrecognizedonthetradedate,i.e.,thedatethattheCompanybecomesapartytothecontractualprovisionsoftheinstrument.Thisincludespurchasesorsalesoffinancialassetsthatrequiredeliveryofassetswithinthetimeframegenerallyestablishedbyregulationorconventioninthemarketplace.

(b) Initial measurement of financial instrumentsTheclassificationoffinancialinstrumentsatinitialrecognitiondependsontheirpurposeandcharacteristicsandthemanagement’sintentioninacquiringthem.Allfinancialinstrumentsaremeasuredinitiallyattheirfairvalueplustransactioncosts,exceptinthecaseoffinancialassetsandfinancialliabilitiesrecordedatfairvaluethroughprofitorloss.

(c) ‘Day 1’ difference for Staff Loans Allstaffloansgrantedatbelowmarketinterestrateswererecognizedatfairvalue.Thedifferencebetweenthefairvalueandtheamountdisbursedweretreatedasdayonedifferenceandamortizedasstaffcostovertheloanperiodbyusingeffectiveinterestrate.Thestaffloansweresubsequentlymeasuredatamortizedcosts.

(d) Financial assets held for trading FinancialassetsheldfortradingarerecordedintheStatementofFinancialPositionatfairvalue.ChangesinfairvaluearerecognizedinIncomeStatement.InterestanddividendincomeorexpenseisrecordedinIncomeStatementaccordingtothe

termsofthecontract,orwhentherighttothepaymenthasbeenestablished.

Includedinthisclassificationareinvestmentsinunittrusts,equitiesthathavebeenacquiredprincipallyforthepurposeofsellingorrepurchasinginthenearterm.

(e) Available for Sale Financial Investments Availableforsaleinvestmentsincludeequityanddebtsecurities.Equityinvestmentsclassifiedasavailableforsalearethosewhichareneitherclassifiedasheldfortradingnordesignatedatfairvaluethroughprofitorloss.

Debtsecuritiesinthiscategoryareintendedtobeheldforanindefiniteperiodoftimeandmaybesoldinresponsetoneedsforliquidityorinresponsetochangesinthemarketconditions.TheGrouphasnotdesignatedanyloansorreceivablesasavailable-for-sale.Afterinitialmeasurement,available-for-salefinancialinvestmentsaresubsequentlymeasuredatfairvalue.

Unrealizedgainsandlossesarerecognizeddirectlyinequity(Othercomprehensiveincome)inthe“Availableforsale”reserve.Whentheinvestmentisdisposedof,thecumulativegainorlosspreviouslyrecognizedinequityisrecognizedintheIncomeStatementin“Otheroperatingincome”.WheretheGroupholdsmorethanoneinvestmentinthesamesecurity,theyaredeemedtobedisposedofonafirst–infirst–outbasis.InterestearnedwhilstholdingavailableforsalefinancialinvestmentsisreportedasinterestincomeusingtheEffectiveInterestRate(EIR).

DividendsearnedwhilstholdingavailableforsalefinancialinvestmentsarerecognizedintheIncomeStatementas“DividendIncome”whentherighttoreceivethedividendhasbeenestablished.

(f) Held to Maturity Financial Investments Heldtomaturityfinancialinvestmentsarenon–derivativefinancialassetswithfixedordeterminablepaymentsandfixedmaturities,whichtheGrouphastheintentionandabilitytoholdtomaturity.Afterinitialmeasurement,held-to-maturityfinancialinvestmentsaresubsequentlymeasuredatamortizedcostusingtheEIR,lessimpairment.Amortizedcostiscalculatedbytaking


intoaccountanydiscountorpremiumonacquisitionandfeesthatareanintegralpartoftheEIR.Theamortizationisincludedin‘Interestandsimilarincome’intheIncomeStatement.

IftheGroupweretosellorreclassifymorethananinsignificantamountofheldtomaturityinvestmentsbeforematurity(otherthanincertainspecificcircumstances),theentirecategorywouldbetaintedandwouldhavetobereclassifiedasavailableforsale.Furthermore,theCompanywouldbeprohibitedfromclassifyinganyfinancialassetasheld-to-maturityduringthefollowingtwoyears.

2.3.2 De recognition of financial assets and financial liabilities (a) Financial assets

Afinancialasset(or,whereapplicableapartofafinancialassetorpartofagroupofsimilarfinancialassets)isderecognizedwhen:

▪ Therightstoreceivecashflowsfromtheassethaveexpired

▪ TheCompanyhastransferreditsrightstoreceivecashflowsfromtheassetorhasassumedanobligationtopaythereceivedcashflowsinfullwithoutmaterialdelaytoathirdpartyundera‘pass–through’arrangement;andeither:

▪ TheCompanyhastransferredsubstantiallyalltherisksandrewardsoftheassetor

▪ TheCompanyhasneithertransferrednorretainedsubstantiallyalltherisksandrewardsoftheasset,buthastransferred control of the asset

(b) Financial liabilitiesAfinancialliabilityisderecognizedwhentheobligationundertheliabilityisdischargedorcancelledorexpires.Whereanexistingfinancialliabilityisreplacedbyanotherfromthesamelenderonsubstantiallydifferentterms,orthetermsofanexistingliabilityaresubstantiallymodified,suchanexchangeormodificationistreatedasaderecognitionoftheoriginalliabilityandtherecognitionofanewliability.Thedifferencebetweenthecarryingvalueoftheoriginalfinancialliabilityandtheconsiderationpaidisrecognizedinprofitorloss.

2.3.3 Determination of fair value of Financial InstrumentsThefairvalueforfinancialinstrumentstradedinactivemarketsatthereportingdateisbasedontheirquotedmarketpricewithoutanydeductionfortransactioncosts.

Forallotherfinancialinstrumentsnottradedinanactivemarket,thefairvalueisdeterminedbyusingappropriatevaluationtechniques.Valuationtechniquesincludethediscountedcashflowmethod,comparisonwithsimilarinstrumentsforwhichmarketobservablepricesexist.

2.3.4 Impairment of Non Financial Assets Other than Goodwill Groupassessesateachreportingdatewhetherthereisanindicationthatanassetmaybeimpaired.Ifanysuchindicationexists,orwhenannualimpairmenttestingforanassetisrequired,theGroupmakesanestimateoftheasset'srecoverableamount.Anasset'srecoverableamountisthehigherofanasset'sorcash-generatingunit'sfairvaluelesscoststo sell and its value in use and is determined for an individual asset,unlesstheassetdoesnotgeneratecashinflowsthatarelargelyindependentofthosefromotherassetsorgroupsofassets.Wherethecarryingamountofanassetexceedsitsrecoverableamount,theassetisconsideredimpairedandiswrittendowntoitsrecoverableamount.

2.3.5 Offsetting financial instrumentsFinancialassetsandfinancialliabilitiesareoffsetandthenetamountreportedintheStatementofFinancialPositionif,andonlyif,thereisacurrentlyenforceablelegalrighttooffsettherecognisedamountsandthereisanintentiontosettleonanetbasis,ortorealisetheassetandsettletheliabilitysimultaneously.Thisisnotgenerallythecasewithmasternettingagreements,therefore,therelatedassetsandliabilitiesarepresentedgrossintheStatementofFinancialPosition.

2.3.6 Business combinations and goodwill Businesscombinationsareaccountedforusingthepurchasemethodofaccounting.Thisinvolvesrecognisingidentifiableassets(includingpreviouslyunrecognisedintangibleassets)andliabilities(includingcontingentliabilitiesandexcludingfuturerestructuring)oftheacquiredbusinessatfairvalue.Anyexcessofthecostofacquisitionoverthefairvaluesoftheidentifiablenetassetsacquiredisrecognisedasgoodwill.Ifthecostofacquisition



islessthanthefairvaluesoftheidentifiablenetassetsacquired,thediscountonacquisition(negativegoodwill)isrecogniseddirectlyintheincomestatementintheyearofacquisition.

Goodwillacquiredinabusinesscombinationisinitiallymeasuredatcost,beingtheexcessofthecostofthebusinesscombinationovertheCompany'sinterestinthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesacquired.Followinginitialrecognition,goodwillismeasuredatcostlessanyaccumulatedimpairmentlosses.Goodwillisreviewedforimpairment,annuallyormorefrequentlyifeventsorchangesincircumstancesindicatethatthecarryingvaluemaybeimpaired

Forthepurposeofimpairmenttesting,goodwillacquiredinabusinesscombinationis,fromtheacquisitiondate,allocatedtoeachoftheCompany'scash-generatingunits,orgroupsofcash-generatingunits,thatareexpectedtobenefitfromthesynergiesofthecombination,irrespectiveofwhetherotherassetsorliabilitiesoftheacquireeareassignedtothoseunitsorgroupsofunits.

Wheregoodwillformspartofacash-generatingunit(orgroupofcash-generatingunits)andpartoftheoperationwithinthatunitisdisposedof,thegoodwillassociatedwiththeoperationdisposedofisincludedinthecarryingamountoftheoperationwhendeterminingthegainorlossondisposaloftheoperation.Goodwilldisposedoffinthiscircumstanceismeasuredbasedontherelativevaluesoftheoperationdisposedoffandtheportionofthecash-generatingunitretained.

Carryingamountofthegoodwillarisingonacquisitionofsubsidiariesispresentedasanintangibleassetandthegoodwillonanacquisitionofanequityaccountedinvestmentininvestmentinassociatesisincludedinthecarryingvalueoftheinvestment.

Whensubsidiariesaresold,thedifferencebetweenthesellingpriceandthenetassetspluscumulativetranslationdifferencesandunamortisedgoodwillisrecognisedintheIncomeStatement.

2.3.7 Property, Plant and Equipment(a) Basis of recognition

Property,plantandequipmentarerecognisedifitisprobable

thatfutureeconomicbenefitsassociatedwiththeassetwillflowtotheGroupandthecostoftheassetcanbereliablymeasured

(b) Basis of measurementAnitemofProperty,PlantandEquipmentthatqualifiesforrecognitionasanassetisinitiallymeasuredatitscost.Costincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheassetsandsubsequentcostasexplainedbelow.Thecostofselfconstructedassetsincludesthecostofthematerialsanddirectlabour,anyothercostdirectlyattributabletobringingtheassetstoaworkingconditionforits intended use and cost of dismantling and removing the old itemsandrestoringsiteonwhichtheyarelocated.Purchasedsoftwarewhichisintegraltothefunctionalityoftherelatedequipmentiscapitalisedaspartofcomputerequipment.

(c) Subsequent costTherearecoststhatarerecognisedinthecarryingamountofanitemifitisprobablethatthefutureeconomicbenefitsembodiedwithinthatpartwillflowtotheGroupanditcanbereliablymeasured.

(d) DepreciationDepreciationiscalculatedonastraight-linebasisovertheusefullifeoftheassets,commencingfromwhentheassetsareavailableforuse.Theestimatedusefullivesoftheassetsareasfollows.

Motorvehicles 4YrsFurnitureandOfficeEquipment 5Yrs

Depreciationisprovidedproportionatelyforthecompletednumberofmonthstheassetisinuse,ifitispurchasedorsoldduringthefinancialyear.

(e) De-recognitionAnitemofProperty,PlantandEquipmentisderecognisedupondisposalorwhennofutureeconomicbenefitsareexpected.Anygainorlossarisingonderecognitionoftheasset(calculatedasthedifferencebetweenthenetdisposalproceedsandthecarryingamountoftheasset)isincludedintheIncomeStatementintheyeartheassetisderecognised.


2.3.8 Intangible assets TheCompany’sintangibleassetsincludethevalueofcomputersoftwareandworkinprogress.AnintangibleassetisrecognizedonlywhenitscostcanbemeasuredreliablyanditisprobablethattheexpectedfutureeconomicbenefitsthatareattributabletoitwillflowtotheCompany.

Intangibleassetsacquiredseparatelyaremeasuredoninitialrecognitionatcost.Thecostofintangibleassetsacquiredinabusinesscombinationistheirfairvalueasatthedateofacquisition.Followinginitialrecognition,intangibleassetsarecarriedatcostlessanyaccumulatedamortizationandanyaccumulatedimpairmentlosses.

Intangibleassetsareamortisedusingthestraightlinemethodtowritedownthecostoveritsestimatedusefuleconomiclivesasgivenbelow.

Computersoftware 5Yrs

Intangibleassetsarederecognizedondisposalorwhennofutureeconomicbenefitsareexpected.Anygainorlossarisingonderecognitionofanintangibleassetismeasuredasthedifferencebetweenthenetdisposalproceedsandthecarryingamountoftheasset)isincludedintheIncomeStatementintheyeartheassetisderecognized.

2.3.9 Taxes(a) Current Tax

Currenttaxassetsandliabilitiesforthecurrentandprioryeararemeasuredattheamountexpectedtoberecoveredfromorpaidtothetaxationauthorities.Thetaxratesandlawsusedtocomputetheamountarethosethatareenactedorsubstantivelyenactedbythereportingdate.

(b) Deferred tax DeferredtaxisprovidedontemporarydifferencesatthedateoftheStatementofFinancialPositionbetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsforfinancialreportingpurposes.Deferredtaxliabilitiesarerecognizedforalltaxabletemporarydifferencesexcept

▪ Wherethedeferredtaxliabilityarisesfromtheinitialrecognitionofgoodwillorofanassetorliabilityinatransactionthatisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss;and

▪ Inrespectoftaxabletemporarydifferencesassociatedwithinvestmentsinsubsidiariesandassociates,wherethetimingofthereversalofthetemporarydifferencescanbecontrolledanditisprobablethatthe temporarydifferenceswillnotreverseintheforeseeablefuture.

Deferredtaxassetsarerecognizedforalldeductibletemporarydifferences,carryforwardofunusedtaxcreditsandunusedtaxlosses,totheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferences,andthecarryforwardofunusedtaxcreditsandunusedtaxlossescanbeutilizedexcept-

▪ Wherethedeferredtaxassetrelatingtothedeductibletemporarydifferencearisesfromtheinitialrecognitionofanassetorliabilityinatransactionthatisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss;and

▪ Inrespectofdeductibletemporarydifferencesassociatedwithinvestmentsinsubsidiariesandassociates,deferredtaxassetsarerecognizedonlytotheextentthatitisprobablethatthetemporarydifferenceswillreverseintheforeseeablefutureandtaxableprofitwillbeavailableagainstwhichthetemporarydifferencescanbeutilized.

ThecarryingamountofdeferredtaxassetsisreviewedateachStatementofFinancialPositiondateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitwillbeavailabletoallowallorpartofthedeferredtaxassettobeutilized.UnrecognizeddeferredtaxassetsarereassessedateachStatementofFinancialPositiondateandarerecognizedtotheextentthatithasbecomeprobablethatfuturetaxableprofitwillallowthedeferredtaxassettoberecovered.



Deferredincometaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheyearwhentheassetisrealizedortheliabilityissettled,basedontaxrates(andtaxlaws)thathavebeenenactedorsubstantivelyenactedatthedateoftheStatementofFinancialPosition.

2.3.10 Employee benefitsGratuityThecostsofretirementgratuitiesaredeterminedbyaqualifiedactuaryusingprojectedunitcreditmethod.ThisitemisstatedunderotherliabilitiesintheStatementofFinancialPosition.Actuarialgainsandlossesarerecognizedasincomeorexpenseinothercomprehensiveincomeduringthefinancialyearinwhichtheyarise.

Employees’ Provident fund and Employees’ trust fundEmployeesareeligibleforEmployees'ProvidentFundcontributionsandEmployees'TrustFundcontributionsinaccordancewiththerespectivestatutesandregulations..CompanyandGroupCompaniescontribute12%and3%toCentralBankofSriLankaforeligibleemployeesforEmployees'ProvidentFundcontributionsandEmployees'TrustFundcontributionsrespectively.

2.3.11 Provisions ProvisionsarerecognisedwhentheGrouphasapresentobligation(legalorconstructive)asaresultofapastevent,itisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligationandareliableestimatecanbemadeoftheamountoftheobligation.

2.3.12 Dividends on Ordinary SharesDividendsonordinarysharesarerecognisedasaliabilityanddeductedfromequitywhentheyareapprovedbytheCompany’sshareholders.InterimdividendsaredeductedfromequitywhentheyaredeclaredandnolongeratthediscretionoftheCompany.

2.3.13 Recognition of income and expensesRevenueisrecognisedtotheextentthatitisprobablethattheeconomicbenefitswillflowtotheCompanyandtherevenuecanbereliablymeasured.Thefollowingspecificrecognitioncriteriamustalsobemetbeforerevenueisrecognised.

(a) Interest and similar income and expenseForallfinancialinstrumentsmeasuredatamortisedcost,interestbearingfinancialassetsclassifiedasavailablefor-saleandfinancialinstrumentsdesignatedatfairvaluethroughprofitorloss,interestincomeorexpenseisrecordedusingtheEIR.EIRistheratethatexactlydiscountsestimatedfuturecashpaymentsorreceiptsthroughtheexpectedlifeofthefinancialinstrumentorashorterperiod,whereappropriate,tothenetcarryingamountofthefinancialassetorfinancialliability.Thecalculationtakesintoaccountallcontractualtermsofthefinancialinstrument(forexample,prepaymentoptions)andincludesanyfeesorincrementalcoststhataredirectlyattributabletotheinstrumentandareanintegralpartoftheEIR,butnotfuturecreditlosses.

ThecarryingamountofthefinancialassetorfinancialliabilityisadjustediftheCompanyrevisesitsestimatesofpaymentsorreceipts.TheadjustedcarryingamountiscalculatedbasedontheoriginalEIRandthechangeincarryingamountisrecordedas’Interestandsimilarincome’forfinancialassetsand‘Interestandsimilarexpense’forfinancialliabilities.However,forareclassifiedfinancialassetforwhichtheCompanysubsequentlyincreasesitsestimatesoffuturecashreceiptsasaresultofincreasedrecoverabilityofthosecashreceipts,theeffectofthatincreaseisrecognisedasanadjustmenttotheEIRfromthedateofthechangeinestimate.

Oncetherecordedvalueofafinancialassetoragroupofsimilarfinancialassetshasbeenreducedduetoanimpairmentloss,interestincomecontinuestoberecognisedusingtherateofinterestusedtodiscountthefuturecashflowsforthepurposeofmeasuringtheimpairmentloss.

(b) Dividend incomeDividendincomefromsharesisrecognizedwhentheCompany'srighttoreceivethepaymentisestablished.

(c) Income from fee - based activitiesFeesforunderwriting,advisorywork,loansyndication,management of funds and all other fees and commissions are recognisedonacashbasis.


(d) Expenditure RecognitionOperatingexpensesarerecognizedintheIncomeStatementonthebasisofadirectassociationbetweenthecostincurredandtheearningofspecificitemsofincome.AllexpenditureincurredintherunningofthebusinessandinmaintainingtheProperty,PlantandEquipmentinastateofefficiencyhasbeenchargedtoincomeinarrivingattheprofitfortheyear.

2.3.14 Cash and Cash Equivalents CashandCashequivalentscompriseofcashbalances,short-termfunds.Thecashflowhasbeenpreparedbyusing“TheInDirectMethod”,wherebygrosscashreceiptsandgrosscashpaymentsofoperatingactivities,investingandfinancingactivitieshavebeenrecognized.

2.3.15 Segment ReportingAnoperatingsegmentisacomponentoftheGroupthatengagesinbusinessactivitiesfromwhichitmayearnrevenuesandincurexpenses,includingrevenuesandexpensesthatrelatetotransactionswithanyoftheGroup’sothercomponents,whoseoperatingresultsarereviewedregularlybythechiefoperatingdecision maker to make decisions about resources allocated to eachsegmentandassessitsperformance,andforwhichdiscretefinancialinformationisavailable.

Formanagementpurposes,theCompanyhasidentifiedthreeoperatingsegmentsbasedonproductsandservices,asfollows:

▪ Investments▪ CapitalMarket▪ FundManagement

Managementmonitorstheoperatingresultsofitsbusinessunitsseparatelyforthepurposeofmakingdecisionsaboutresourceallocationandperformanceassessment.Segmentperformanceisevaluatedbasedonoperatingprofitsorlosseswhich,incertainrespects,aremeasureddifferentlyfromoperatingprofitsorlossesintheConsolidatedFinancialStatements.Incometaxesaremanagedonagroupbasisandarenotallocatedtooperatingsegments.

2.3.16 New Accounting Standards that became effective during the Year

LKAS 1 -Presentation of Items of Other Comprehensive Income – Amendments to LKASTheamendmentstoLKAS1introduceagroupingofitemspresentedinOtherComprehensiveIncome.Itemsthatwillbereclassified(‘recycled’)toprofitorlossatafuturepointintime(e.g.,netlossorgainonAvailableForSalefinancialassets)havetobepresentedseparatelyfromitemsthatwillnotbereclassified(e.g.,revaluationoffreeholdlandandbuildings).ThesaidamendmentsaffectpresentationonlyandhavenoimpactontheCompany’sorGroup’sFinancialPositionorPerformance.

SLFRS 7 Financial Instruments: Disclosures -Offsetting Financial Assets and Financial LiabilitiesAmendmentstoSLFRS7requireanentitytodiscloseinformationaboutrightstoset-offfinancialinstrumentsandrelatedarrangements(e.g.,collateralagreements).Thedisclosureswouldprovideuserswithinformationthatisusefulinevaluatingtheeffectofnettingarrangementsonanentity’sFinancialPosition.ThenewdisclosuresarerequiredforallrecognisedfinancialinstrumentsthataresetoffinaccordancewithLKAS32.Thedisclosuresalsoapplytorecognisedfinancialinstrumentsthataresubjecttoanenforceablemasternettingarrangementorsimilaragreement,irrespectiveofwhetherthefinancialinstrumentsaresetoffinaccordancewithLKAS32.ThenecessarydisclosuresrequiredbythenewamendmenthavebeenincludedintheNotestotheFinancialStatements.

SLFRS 10 Consolidated Financial Statements and LKAS 27 Separate Financial StatementsSLFRS10establishesasinglecontrolmodelthatappliestoallentitiesincludingspecialpurposeentities.SLFRS10replacesthepartsofpreviouslyexistingLKAS27ConsolidatedandSeparateFinancialStatementsthatdealtwithConsolidatedFinancialStatementsandSIC-12Consolidation–SpecialPurposeEntities.SLFRS10changesthedefinitionofcontrolsuchthataninvestorcontrolsaninvesteewhenitisexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeinvesteeandhastheabilitytoaffectthosereturnsthroughitspowerovertheinvestee.TomeetthedefinitionofcontrolinSLFRS10,allthreecriteriamustbemet,including:



(a)aninvestorhaspoweroveraninvestee;(b) theinvestorhasexposure,orrights,tovariablereturns

fromitsinvolvementwiththeinvestee;and(c)theinvestorhastheabilitytouseitspoweroverthe

investeetoaffecttheamountoftheinvestor’sreturns.

SLFRS10hadnoimpactontheconsolidationofinvestmentsheldbytheCompanyandGroup.

SLFRS 11 Joint Arrangements and LKAS 28 Investment in Associates and Joint venturesSLFRS11replacesLKAS31InterestsinJointVenturesandSIC-13Jointly-controlledEntities—Non-monetarycontributionsbyVentures.SLFRS11removestheoptiontoaccountforjointlycontrolledentities(JCEs)usingproportionateconsolidation.Instead,JCEsthatmeetthedefinitionofajointventureunderSLFRS11mustbeaccountedfor,byusingtheequitymethod.

SLFRS 12 Disclosure of Interests in Other EntitiesSLFRS12setsouttherequirementsfordisclosuresrelatingtoanentity’sinterestsinsubsidiaries,jointarrangements,associatesandstructuredentities.NecessarydisclosuresrequiredbythenewStandardhavebeenincludedintheNotestotheFinancialStatements

SLFRS 13 Fair value MeasurementSLFRS13establishesasinglesourceofguidanceunderSLFRSforallfairvaluemeasurements.SLFRS13doesnotchangewhenanentityisrequiredtousefairvalue,butratherprovidesguidanceonhowtomeasurefairvalueunderSLFRSwhenfairvalueisrequiredorpermitted.TheapplicationofSLFRS13hasnotmateriallyimpactedthefairvaluemeasurementscarriedoutbytheCompanyandGroup.

SLFRS13alsorequiresspecificdisclosuresonfairvalues,someofwhichreplaceexistingdisclosurerequirementsinotherstandards,includingSLFRS7–‘FinancialInstruments:Disclosures’.NecessarydisclosuresrequiredbythenewStandardhavebeenincludedintheNotestotheFinancialStatements.

2.3.17 Standards Issued But Not yet EffectiveThestandardsandinterpretationsthatareissuedbutnotyeteffectiveuptothedateofissuanceoftheCompanyandthe

GroupFinancialStatementsaredisclosedbelow.TheCompanyandtheGroupintendstoadoptthesestandards,ifapplicable,whentheybecomeeffective.

(i)SLFRS9-FinancialInstruments:ClassificationandMeasurement

SLFRS9,reflectsthefirstphaseofworkonreplacementofLKAS39andappliestoclassificationandmeasurementoffinancialassetsandliabilities.

Thisstandardwasoriginallyeffectiveforannualperiodscommencingonorafter01January2015.Howevertheeffectivedatehasbeendeferredsubsequently.

(ii) SLFRS14-RegulatoryDeferralAccounts Thescopeofthisstandardislimitedtofirst-timeadoptersofSLFRSthatalreadyrecogniseregulatorydeferralaccountbalancesintheirFinancialStatements.Consequently,theFinancialStatementsofrateregulatedentitiesthatalreadyapplySLFRS,orthatdonototherwiserecognisesuchbalances,willnotbeaffectedbythisstandard.Thisstandardiseffectivefortheannualperiodsbeginningonorafter01January2016.

(iii)SLFRS15-RevenuefromContractswithCustomers

SLFRS15establishesacomprehensiveframeworkfordeterminingwhether,howmuchandwhenrevenueisrecognised.Itreplacesexistingrevenuerecognitionguidance,includingLKAS18Revenue,LKAS11ConstructionContractsandInternationalFinancialReportingInterpretationsCommittee(IFRIC)13CustomerLoyaltyProgrammes.Thisstandardiseffectivefortheannualperiodsbeginningonorafter01January2017.

NoneofthesenewstandardsandinterpretationsisexpectedtohaveaneffectontheConsolidatedFinancialStatementsoftheCompanyandtheGroupFinancialStatements,exceptforSLFRS9and15.Pendingthedetailedreviewofsuchstandardsandinterpretations,theextentoftheimpacthasnotbeendeterminedbythemanagement.



Group CompanyYear ended 31 December 2014 2013 2014 2013 Rs. '000 Rs. '000 Rs. '000 Rs. '000

3. INTEREST INCOMEInterestIncomefromDebentures 201,273 104,473 144,765 85,940InterestfromMoneyMarketOperations 1,385 3,063 1,252 3,063InterestonBankDeposits 4,219 11,262 - 148InterestonSecuritizations 1,458 39,811 1,202 39,811OtherInterestIncome 22,314 1,835 - - 230,649 160,444 147,219 128,962

4. DIvIDEND INCOMEDividendIncomefromSecurities -QuotedInvestments 28,979 17,873 28,979 17,873 -Non-QuotedInvestments 8,361 23,606 8,361 23,606DividendIncomefromSubsidiaries/Associates -Non-QuotedInvestments - - 29,787 20,079 37,340 41,479 67,127 61,558

5. EqUITY INCOMERealizedEquityCapitalGains 83,817 26,851 83,817 26,851UnRealizedEquityCapitalGains 105,955 6,656 105,955 6,656 189,772 33,507 189,772 33,507

6. OTHER INCOMEIncomefromUnitTrusts 316,503 602,303 271,485 560,304OtherFeebasedIncome 555,229 631,303 - -Gain/(Loss)fromDisposalofDebentures 79,523 - 79,523 -OtherIncome 7,922 - - - 959,177 1,233,606 351,008 560,304

7. PERSONNEL ExPENSESRemuneration 179,206 192,796 24,218 24,123ContributiontoDefined ContributionPlans-EPF/ETF 26,881 29,663 3,630 2,889ContributiontoDefinedBenefitPlans-Gratuity 10,314 6,114 1,194 1,719Others 49,604 32,676 25,441 29,508 266,005 261,248 54,483 58,239


Group CompanyYear ended 31 December 2014 2013 2014 2013 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000

8. ADMINISTRATIvE ExPENSES AND OTHER OPERATING eXPenses

DirectorsEmoluments 4,260 3,353 3,900 2,993AuditorsRemuneration 2,438 1,954 1,098 613PortfolioManagementFees 12,126 - 12,537 542ProfessionalFees 19,672 21,489 7,071 1,244DepreciationofProperty,PlantandEquipment 37,947 30,869 1,825 176OfficeAdministrationandEstablishmentExpenses 174,786 118,609 33,132 17,392 251,229 176,274 59,563 22,960

9. TAxATIONThecomponentsofincometaxexpensefortheyearsended31December2014and2013are:

Current tax expensesIncomeTaxExpenses - 20,791 - 20,791IncomeTaxofSubsidiaryCompanies 25,341 74,739 - - 25,341 95,530 - 20,791AdjustmentinrespectofCurrentIncomeTaxofPriorYears (19,714) 1,658 (11,443) 1,125 5,627 97,188 (11,443) 21,916

Deferred tax expensesDeferredtaxation(Reversal)/charge (11,057) 2,272 (12,340) -Total Tax charged to the Income Statement (5,430) 99,460 (23,783) 21,916

EffectiveTaxRate 10% 3%

a. Reconciliation of the total Tax ExpensesProfitbeforeTax 958,869 1,031,514 641,080 703,132

ExemptProfit (861,944) (672,164) (746,532) (711,636)NonDeductibleExpenses 150,109 37,789 61,694 83,011DeductibleExpenses (157,091) (55,961) (314) (254)TaxableIncome/(Losses) 89,944 341,178 (44,071) 74,253

IncomeTaxonTaxableIncome 25,341 95,530 - 20,791Charge/(Reversal)ofDefferedTax(Note15.3) (11,057) 2,272 (12,340) -AdjustmentinRespectofCurrentIncomeTaxofPriorYears (19,714) 1,658 (11,443) 1,125 (5,430) 99,460 (23,783) 21,916



10. EARNINGS PER SHAREThebasicearningspersharefor2014and2013havebeencalculatedbydividingtheprofitattributabletoordinaryshareholdersbytheweightedaveragenumberofordinarysharesoutstandingduringtheyearasrequiredbytheSriLankaAccountingStandardNo.33onEarningsPerShare

Group CompanyYear ended 31 December 2014 2013 2014 2013 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000

Amount used as the NumeratorProfitattributedtoOrdinaryShareholders(Rs.'000) 964,299 932,054 664,863 681,216Amount used as the DenominatorWeightedAverageNumberofOrdinary SharesforEPScalculation 32,904 35,643 32,904 35,643weighted Average Basic Earnings Per share (Rs.) 29.31 26.15 20.21 19.11

11. DIvIDENDS PER SHARETheCompanyhasdeclaredRs.27.50pershareasaFinalDividendfortheyear2014.(2013-Rs.8.50pershare).

12 PROPERTY, PLANT AND EqUIPMENT12.1 group12.1.1 Gross Carrying AmountsYear ended 31 December Balance Additions Disposals Balance as at during the during the as at 01.01.2014 year year 31.12.2014 Rs.'000 Rs.'000 Rs.'000 Rs.'000

At CostComputerEquipment 26,919 2,616 (3,146) 26,389OfficeEquipmentandFurniture 46,442 3,684 (1,560) 48,566MotorVehicles 58,818 40,047 (7,250) 91,615Total value of Depreciable Assets 132,179 46,347 (11,956) 166,570


12.1.2 DepreciationYear ended 31 December Balance Additions Disposals Balance as at during the during the as at 01.01.2014 year year 31.12.2014 Rs.’000 Rs.’000 Rs.’000 Rs.’000

At CostComputerEquipment 24,325 4,265 (3,184) 25,406OfficeEquipmentandFurniture 42,674 2,386 (1,547) 43,513MotorVehicles 29,722 13,563 (7,250) 36,035Total Depreciation 96,721 20,214 (11,981) 104,954

12.1.3 Net Book ValueComputerEquipment 983OfficeEquipmentandFurniture 5,053MotorVehicles 55,580Net book value as at 31 December 2014 61,616Net book value as at 31 December 2013 35,458

12.1.4Duringthefinancialyear,theGrouphasacquiredProperty,PlantandEquipmentamountingtoRs.46,346,148(2013- Rs.6,870,000).

12.1.5 ThecostoffullydepreciatedProperty,Plant&Equipmentasof31December2014amountingtoRs.56,795,374.

12.2 CompaNy12.2.1 Gross Carrying Amounts Balance Balance as at as at 01.01.2014 Additions Disposals 31.12.2014 Rs.'000 Rs.'000 Rs.'000 Rs.'000

At CostComputerEquipment 568 120 - 688OfficeEquipmentandFurniture 414 229 - 643MotorVehicles - 12,491 - 12,491Total value of Depreciable Assets 982 12,840 - 13,822



12.2.2 Depreciation Balance Charge Balance as at for the as at 01.01.2014 Year Disposals 31.12.2014 Rs.'000 Rs.'000 Rs.'000 Rs.'000

At CostComputerEquipment 85 133 - 218OfficeEquipmentandFurniture 193 68 - 261MotorVehicles - 1,600 - 1,600Total Depreciation 278 1,801 - 2,079

12.2.3 Net Book ValueComputerEquipment 470OfficeEquipmentandFurniture 382MotorVehicles 10,891Net book value as at 31 December 2014 11,743Net book value as at 31 December 2013 704

12.2.4 Duringthefinancialyear,theCompanyhasacquiredProperty,PlantandEquipmentamountingtoRs.12,839,904 (2013-Rs.558,000)

12.2.5 ThecostoffullydepreciatedProperty,Plant&Equipmentasof31December2014amountingtoRs.143,010

12.3 Group/CompanyTheusefullivesoftheassetsareestimatedasfollows; 2014 2013

ComputerEquipment 5Years 5YearsOfficeEquipmentandFurniture 5Years 5YearsMotorVehicles 4Years 4Years

13 INvESTMENT IN SUBSIDIARIES 2014 2013Year ended 31 December Percentage Percentage Holding Cost Holding Cost (%) Rs.`000 (%) Rs.`000

NDBWealthManagementLtd 100 412,460 100 412,460NDBInvestmentBankLtd 100 290,560 100 290,560NDBSecurities(Pvt)Ltd 100 292,060 100 292,060 995,080 995,080


14 INvESTMENT IN ASSOCIATE Holding Group Company 2014 2013 2014 2013 2014 2013 Rs.’000 Rs.’000 Rs.’000 Rs.’000

InvestmentinResusEnergyPLC 32.40% - 729,390 - 729,390 -

ShareofProfitafterTaxattributabletotheEquityHolders - - 59,166 - - - oftheParentTotalCarryingValueofInvestmentinAssociate - - 788,556 - 729,390 -

14.1 NDBCapitalHoldingsPLChasinvestedin40.5MnOrdinarySharesofResusEnergyPLC,formerlyknownasHemasPowerPLC,on5December2014,constitutingapproximately32.4%shareholdinginthesaidCompany.

15 DEFERRED TAx15.1 DeferreD tax asset 2014 2013 Rs.'000 Rs.'000

GroupBalanceasatthebeginningoftheYear 8,532 721Provision/(Release)madeduringtheYear 19,348 7,811Balance as at the end of the Year 27,880 8,532

CompanyBalanceasatthebeginningoftheYear - -Provision/(Release)madeduringtheYear 12,340 -Balance as at the end of the Year 12,340 -

15.2 DeferreD tax liaBilityGroupBalanceasatthebeginningoftheYear 20,550 -Provision/(Release)madeduringtheYear (2,215) 3,460DeferredtaxonInvestmentsAvailableForSale - 17,090BalanceasattheendoftheYear 18,335 20,550Net Deferred Tax (Asset) / Liability (9,545) 12,018

CompanyBalanceasatthebeginningoftheYear 17,090 -Provision/(Release)madeduringtheYear - 17,090BalanceasattheendoftheYear 17,090 17,090Net Deferred Tax Liability / (Asset) 4,750 17,090



15.3 DeferreD tax assets, liaBilities aND iNCome tax relates to tHe folloWiNg Other Balance Income Comprehensive Sheet Statement Income 2014 2013 2014 2013 2014 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

GroupDeferred Tax LiabilityCapitalAllowanceforTaxPurposes (1,245) (3,460) 1,477 3,461 - -GainonAvailableForSaleInvestments (17,090) (17,090) - - - 17,090 (18,335) (20,550) 1,477 3,461 - 17,090 Deferred Tax AssetsDefinedBenefitPlans 7,201 2,418 1,944 1,277 - -TaxLosses 20,679 6,114 (14,478) (2,466) - - 27,880 8,532 (12,534) (1,189) - -Deferred Tax Income/(Expenses) - - (11,057) 2,272 - 17,090Net Deferred Tax Asset / (Liability) 9,545 (12,018) -

16 INTANGIBLE ASSETS Software Goodwill TotalYear ended 31 December 2014 2013 2014 2013 2014 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

GroupCost/Carrying valueAtthebeginningoftheYear 63,784 61,017 - 4,342 63,784 65,359AdditionsduringtheYear 29,894 2,767 - - 29,894 2,767Write-offduringtheYear - - - (4,342) - (4,342)AttheendoftheYear 93,678 63,784 - - 93,678 63,784

Accumulated AmortisationAtthebeginningoftheYear 28,303 16,143 - - 28,303 16,143AmortisationduringtheYear 17,734 12,160 - - 17,734 12,160AttheendoftheYear 46,037 28,303 - - 46,037 28,303

Net Carrying value 47,641 35,481 - - 47,641 35,481


16 INTANGIBLE ASSETS Software Total 2014 2013 2014 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000

CompanyCost/Carrying valueAtthebeginningoftheYear 380 - 380 -AdditionsduringtheYear - 380 - 380At the end of the Year 380 380 380 380

Accumulated AmortisationAtthebeginningoftheYear 71 - 71 -AmortisationduringtheYear 26 71 26 71At the end of the Year 97 71 97 71

Net Carrying value 283 309 283 309

17 OTHER NON CURRENT FINANCIAL ASSETS Group Company 2014 2013 2014 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000

FinancialInvestmentsAvailableForSale- NonQuotedSecurities(Note17.1) 185,000 185,000 185,000 185,000FinancialInvestmentsclassifiedasLoansand Receivables(Note17.2) - - - -FinancialInvestmentsHeldtoMaturity(Note17.3) 1,226,362 888,342 803,207 595,615FinancialInvestmentsAvailableForSale- QuotedSecurities(Note17.4) 79,500 - 79,500 -Total 1,490,862 1,073,342 1,067,707 780,615



17.1 fiNaNCial iNvestmeNts availaBle for sale - NoN quoteD equity seCuritiesGroup/Company Directors' Directors' Cost valuation Cost valuation 2014 2014 2013 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000

PawanDanavi(Pvt)Ltd 125,000 125,000 95,400 125,000DelmegeForsythandCo.Ltd 3,172 3,172 3,172 3,172LankaCommunicationServices(Pvt)Ltd 60,000 60,000 28,565 60,000GrossCarryingValueofEquitySecurities 188,172 188,172 127,137 188,172ProvisionforUnrecoverableInvestments (3,172) (3,172) (3,172) (3,172)Net Carrying value of Equity Securities 185,000 185,000 123,965 185,000

17.2 fiNaNCial iNvestmeNts ClassifieD as loaNs aND reCeivaBles - prefereNCe sHares Current Non Current Total Total 2014 2014 2014 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Group/CompanyKelaniValleyCanneriesPLC - 1,000 1,000 1,000GrossCarryingValueofPreferenceShares - 1,000 1,000 1,000ProvisionforUnrecoverableInvestments - (1,000) (1,000) (1,000)Net Carrying value of Preference Shares - - - -

17.3 fiNaNCial iNvestmeNts HelD to maturity - DeBeNtures Group Company non non Current Current Total Total Current Current Total Total 2014 2014 2014 2013 2014 2014 2014 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Group/CompanyBankofCeylon - 103,811 103,811 100,108 - 103,811 103,811 100,108SingerFinanceLankaPLC - 206,837 206,837 206,837 - 206,837 206,837 206,837SoftlogicHoldingsPLC - 207,940 207,940 207,940 - 207,940 207,940 207,940HDFCBankPLC - 87,317 87,317 80,730 - 87,317 87,317 80,730RichardPieris - 98,139 98,139 - - 98,139 98,139 -SiyapathaFinance - 99,163 99,163 - - 99,163 99,163 -Others - 423,155 423,155 292,727 - - - - - 1,226,362 1,226,362 888,342 - 803,207 803,207 595,615


17.4 fiNaNCial iNvestmeNts availaBle for sale - quoteD equity seCuritiesGroup/Company Fair Fair Cost valuation Cost valuation 2014 2014 2013 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000

AlumexLimited 70,000 79,500 - -CarryingValueofEquitySecurities 70,000 79,500 - -

18 PROvISION FOR NON PERFORMING INvESTMENTS18.1 group/CompaNy 2014 2013 Rs.'000 Rs.'000

18.1.1 Movement of the Provision for Non Performing InvestmentsAsatthebeginningoftheYear 4,172 21,311AmountsWrittenOff - (17,139)As at the end of the Year 4,172 4,172

18.1.2 Provision for Non- Performing Investments is made up as follows:OnInvestmentinEquitySecurities(Note17.1) 3,172 3,172OnPreferenceShares(Note17.2) 1,000 1,000 4,172 4,172

19 TRADE AND OTHER RECEIvABLES Group Company 2014 2013 2014 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000

TradeandOtherReceivables 661,534 804,100 113,570 13,305



20 OTHER FINANCIAL INvESTMENTS CLASSIFIED AS LOANS AND RECEIvABLES Group Company 2014 2013 2014 2013 Rs.’000 Rs.’000 Rs.’000 Rs.’000

InvestmentsinSecuritizations - 91,698 - 91,698InvestmentsinReverseRepurchaseAgreements - 7,604 - -InvestmentinFixedDeposits 5,235 4,875 - -InvestmentinDebentures 381,048 854,943 381,048 763,819 386,283 959,120 381,048 855,517

21 FINANCIAL INvESTMENTS AT FAIR vALUE THROUGH PROFIT OR LOSSFinancial Investments Held For Trading Group Company 2014 2013 2014 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000

QuotedEquities 713,868 332,628 713,868 332,628InvestmentsinUnitTrusts 2,529,412 3,137,159 2,113,290 2,746,778 3,243,280 3,469,787 2,827,158 3,079,406

22 CASH AND BANK BALANCESCashatBank 56,748 61,913 22,936 20,309Short-TermDeposits 138,126 95,004 - - 194,874 156,917 22,936 20,309

22.1 CasH aND CasH equivaleNtsTotalCashandBankBalances 194,874 156,917 22,936 20,309BankOverdrafts (1,867) (16,281) - -CashandCashEquivalents 193,007 140,636 22,936 20,309


23 STATED CAPITAL 2014 2013 Number Number

Ordinary Shares (Number)FullyPaidOrdinarySharesasof1January 32,904,933 43,855,007SharesrepurchasedduringtheYear - (10,950,074)FullyPaidOrdinarySharesasof31December 32,904,933 32,904,933

2014 2013 Rs.'000 Rs.'000

Ordinary Shares (Amount)FullyPaidOrdinaryShares 1,328,880 1,328,880 1,328,880 1,328,880

24 EMPLOYEE BENEFIT LIABILITY24.1 group 2014 2013 Rs.'000 Rs.'000

AtthebeginningoftheYear 28,338 36,910RecognizedonIncomeStatement 5,578 2,648RecognizedonOCI 13,953 (10,212) 47,869 29,346Payments/PayablesduringtheYear (4,778) (1,008)At the end of the Year 43,091 28,338



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24 EMPLOYEE BENEFIT LIABILITY (Contd.)PrincipalAssumptionsinperformingtheGratuityFormulaareshownbelow: 2014 2013

DiscountRate 10% 11%-12%SalaryIncrementRate 8%-11% 8%-11%StaffTurnoverFactor 15%-18% 12%RetirementAge 55Years 55Years

24.2 CompaNy 2014 2013 Rs.'000 Rs.'000

AtthebeginningoftheYear 1,719 -ChargefortheYear 1,195 1,719At the end of the Year 2,914 1,719

PrincipalAssumptionsinperformingtheGratuityFormulaareshownbelow: 2014 2013

DiscountRate 11% 10%SalaryIncrementRate 10% 11%StaffTurnoverFactor 15% 15%RetirementAge 55Years 55Years

25 OTHER PAYABLES Group Company 2014 2013 2014 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000

SundryCreditorsIncludingAccruedExpenses 315,950 577,540 62,525 25,169 315,950 577,540 62,525 25,169



26 ASSETS PLEDGEDThegrouphaspledged73MnunitsvaluedatRs.768.5Mnasof31December2014forbankguaranteeandoverdraftfacilitiesobtainedfromNationalDevelopmentBankPLC.

27 COMMITMENTS AND CONTINGENCIESThecompanyhasaGuaranteeandOverdraftfacilityforRs.500MnwithNationalDevelopmentBankPLCforthepurposeoffundingrequirementsintheeventofinvestinginDebentures.

Otherthantheaforementionedfacility,therearenosignificantcommitmentsandcontingenciesasatthedateofStatementofFinancialPosition.

28 FAIR vALUE OF FINANCIAL ASSETSfiNaNCial assets reCorDeD at fair valueThefollowingisadescriptionofhowfairvaluesaredeterminedforfinancialinstrumentsthatarerecordedatfairvalueusingvaluationtechniques.Theseincorporatethecompany’sestimateofassumptionsthatamarketparticipantwouldmakewhenvaluingtheinstruments.

fiNaNCial assets HelD for traDiNgFinancialAssetsheldfortradingconsistofquotedequitysecuritiesandinvestmentsinunittrusts.QuotedequitysecuritiesarevaluedusingmarketpricepublishedbyColomboStockExchange.Investmentsinunittrustsarevaluedatmarketratespublishedbytherespectiveunittrusts.

fiNaNCial assets availaBle for saleFinancialAssetsAvailableforSalesolelyconsistofinvestmentsinprivateequitiesandquotedequities.


28.1 DetermiNatioN of fair value aND fair value HierarCHyThecompanyusesthefollowinghierarchyfordetermininganddisclosingthefairvalueoffinancialinstrumentsbyvaluationtechnique.

Level1:quoted(unadjusted)pricesinactivemarketsforidenticalassetsorliabilities.Level2:othertechniquesforwhichallinputswhichhavesignificanteffectontherecordedfairvalueareobservable,either directlyorindirectly.Level3:techniqueswhichuseinputsthathaveasignificanteffectontherecordedfairvaluethatarenotbasedonobservable marketdata.

Thefollowingtableshowsananalysisoffinancialinstrumentsrecordedatfairvaluebylevelofthefairvaluehierarchy:

Group31 December 2014 Level 1 Level 2 Level 3 Total Rs.'000 Rs.'000 Rs.'000 Rs.'000

Financial AssetsFinancialInvestmentsHeldforTradingEquitySecurities 713,868 - - 713,868InvestmentinUnitTrusts 2,529,412 - - 2,529,412

FinancialInvestmentsAvailableForSaleQuotedEquitySecurities 79,500 - - 79,500Total Financial Assets 3,322,780 - - 3,322,780

31 December 2013 Level 1 Level 2 Level 3 Total Rs.'000 Rs.'000 Rs.'000 Rs.'000

Financial AssetsFinancialInvestmentsHeldforTradingEquitySecurities 332,628 - - 332,628InvestmentinUnitTrusts 3,137,159 - - 3,137,159

FinancialInvestmentsAvailableForSaleNonQuotedEquitySecurities(28.1.2) - - 185,000 185,000Total Financial Assets 3,469,787 - 185,000 3,654,787



28.1 DetermiNatioN of fair value aND fair value HierarCHy (CONTD.)Company31 December 2014 Level 1 Level 2 Level 3 Total Rs.'000 Rs.'000 Rs.'000 Rs.'000

Financial AssetsFinancial Investments Held for Trading EquitySecurities 713,868 - - 713,868InvestmentinUnitTrusts 2,113,290 - - 2,113,290

Financial Investments Available For SaleQuotedEquitySecurities 79,500 - - 79,500 2,906,658 - - 2,906,658

31 December 2013 Level 1 Level 2 Level 3 Total Rs.'000 Rs.'000 Rs.'000 Rs.'000

Financial AssetsFinancial Investments Held for TradingEquitySecurities 332,628 - - 332,628InvestmentinUnitTrusts 2,746,778 - - 2,746,778

Financial Investments Available For SaleNonQuotedEquitySecurities - - 185,000 185,000 3,079,406 - 185,000 3,264,406


28.1.2 Movements in Level 3 Financial Instruments measured at Fair ValueGroup31 December 2013 Total Gains / Total Gains / At 1 (Losses ) (Losses ) At 31 January recorded in recorded in December 2013 Profit / Loss Equity 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Financial Investments Available For SaleNonQuotedEquitySecurities 106,826 17,139 61,035 185,000Total Financial Assets 106,826 17,139 61,035 185,000

Company31 December 2013 Total Gains / Total Gains / At 1 (Losses ) (Losses ) At 31 January recorded in recorded in December 2013 Profit / Loss Equity 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Financial Investments Available For SaleNonQuotedEquitySecurities 106,826 17,139 61,035 185,000Total Financial Assets 106,826 17,139 61,035 185,000

28.2 Setoutbelowisacomparison,byclass,ofthecarryingamountsandfairvaluesoftheCompany'sfinancialinstrumentsincluding the instrumentsthatarenotcarriedatfairvalueintheFinancialStatements.Thistabledoesnotincludethefairvaluesofnon-financialassetsandnon-financialliabilities

Group 2014 2013 Carrying Fair Carrying Fair Amount value Amount value Level Rs.'000 Rs.'000 Rs.'000 Rs.'000

Financial AssetsCashandCashEquivalents 2 194,874 194,874 156,917 156,917FinancialInvestmentsClassifiedas LoansandReceivables 2 386,283 386,283 959,120 959,120FinancialInvestmentsHeldtoMaturity 2 1,226,362 1,226,362 888,342 888,342Total Financial Assets 1,807,519 1,807,519 2,004,379 2,004,379



Company 2014 2013 Carrying Fair Carrying Fair Amount value Amount value Level Rs.'000 Rs.'000 Rs.'000 Rs.'000

Financial AssetsCashandCashEquivalents 2 22,936 22,936 20,309 20,309FinancialInvestmentsclassifiedasLoansand Receivables 2 381,048 381,048 855,517 855,517FinancialInvestmentsHeldtoMaturity 2 803,207 803,207 595,615 595,615Total Financial Assets 1,207,191 1,207,191 1,471,441 1,471,441

29 EvENTS OCCURRING AFTER THE REPORTING DATE(a) NDBCapitalHoldingsPLCenteredintoaShareholdersagreementwithZephyrManagementLPon15December2014,

toinvestin60%ordinarysharesand60%redeemablepreferencesharesinNDBZephyrpartnersLtd,theManagement CompanybasedinMauritius,managingSriLanka'slargestcountrydedicatedprivateequityfund.Accordinglythe investmenttookplaceon2January2015,amountingtoRs.49.6Mn.

(b)TheCompanyhasbeenofficiallydelistedfromtheColomboStockExchangeon26January2015andaccordinglythenameoftheCompanyhaschangedtoNDBCapitalHoldingsLimitedwitheffectfrom2March2015.

(C)On26March2015,theBoardofDirectorsapprovedapaymentofRs.27.50pershareasafinaldividendfortheyear2014.Accordingly,thetotalamounttobepaidasdividendwouldamounttoRs.904,885,657.50

Otherthantheaforementionedevents,therehavebeennoeventssubsequenttotheendofthereportingperiodthatrequiredisclosuretotheshareholdersofthecompany.


30 RELATED PARTY DISCLOSURESGroup / Company30.1 terms aND CoNDitioNsTheCompanycarriesouttransactionswithKeyManagementandtheirrelatedconcernsandotherrelatedentitiesintheordinarycourseofitsbusinessonanarmslengthbasisatcommercialrates.

30.2 traNsaCtioNs WitH tHe relateD eNtitiesRelated Party Relationship Nature of Transactions 2014 2013 Rs.'000 Rs.'000

30.2.1NationalDevelopment UltimateParent DividendPaid 275,766 659,136BankPLC Company CashBalance31December 22,821 17,789 InterestIncomeonShort TermInvestments - 148 SharesRepurchase - 5,944,873

30.2.2NDBWealthManagementLtd Subsidiary DividendReceived 10,000 5,000 Company PortfolioAdministrationFees 12,537 411

30.2.3NDBSecurities(Pvt)Ltd Subsidiary DividendReceived 810 - Company BrokeragePaid - 1,638

30.2.4 NDBInvestmentBankLtd Subsidiary DividendReceived 18,977 15,078 Company RetainerFee 228 - AdvisoryfeeforShareRepurchase - 457

Furthertothedisclosuresabove,theGrouphaspledged73MnunitsvaluedatRS.768.5Mnasof31December2014forBankGuaranteeandOverdraftfacilitiesobtainedfromNDB.

TheCompanyhasaGuaranteeandOverdraftfacilityforRs.500MnwithNDBforthepurposeoffundingrequirementsintheeventofinvestinginDebentures.

31 TRANSACTIONS wITH KEY MANAGEMENT PERSONNEL OF THE COMPANY AND ITS PARENT COMPANYRelatedpartiesincludekeymanagementpersonneldefinedaspersonshavingauthorityandresponsibilityforplanning,directingandcontrollingthecompanyanditssubsidiaries.

Keymanagementpersonnelincludethemembersoftheboardofdirectorsofthecompanyanditsparentandthekeyemployeeswhomeetthecriteriamentionedabove.



a) Key Management Personnel Compensation 2014 2013 Rs.'000 Rs.'000

ShortTermEmployeeBenefits 27,896 27,699Total Compensation paid to key management Personnel 27,896 27,699

Theamountsdisclosedabovearetheamountsrecognizedasanexpenseduringthereportingperiodrelatingtokeymanagementpersonnel.Inadditiontotheremuneration,thecompanyprovidesnoncashbenefitssuchasvehicle,insuranceforkeymanagementpersonnelinlinewiththeapprovedbenefitplanofthecompany.

Transactionsinvolvingentitieswhicharecontrolled/significantlyinfluencedbyKeyManagementPersonnelandtheirclosefamilymembers.

2014 2013 Rs.’000 Rs.’000

InvestmentinDebentures 207,940 207,940 207,940 207,940

32 SEGMENTAL INFORMATION - GROUPNDBCapitalHoldingsLTDisafullserviceinvestmentbank.TheprincipalactivitiesoftheCompanyanditssubsidiariesarefee-basedandfund-basedinvestmentbanking.Thefund-basedinvestmentbankingactivitiesincludeprivateequity,proprietarytrading,underwriting,andinvestmentsinlistedequities,fixedincomesecurities,hybridsecuritiesandunittrusts.Fee-basedactivitiesoftheCompanyarecarriedoutthroughitssubsidiaries.

NDBInvestmentBankLTDoffersfeebasedinvestmentbankingservices.Theproductrangeincludesdebtandequitystructuringandplacement,corporateadvisoryservicesandfacilitationofmergersandacquisitions.

NDBWealthManagementLimitedofferscomprehensivewealthmanagementsolutionsintheformofdiscretionaryportfoliomanagement,privatewealthmanagementandmutualfunds.

NDBSecurities(Pvt)Limitedalicensedstockbroker,isafullmemberoftheColomboStockExchangewhichprovidesavarietyofinvestmentresearchandadvisoryservicesandonlinetradingfacilities.Further,thefirmprovidesmarginloanfacilitiesthroughNationalDevelopmentBankPLC.


Fund Capital Investments Management Market Total 2014 2013 2014 2013 2014 2013 2014 2013 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

Income 732,338 771,711 347,324 222,834 337,275 474,491 1,416,937 1,469,036

(a) SegmentResultsProfitfromOperatingActivities 610,533 684,455 191,222 106,799 97,948 240,260 899,703 1,031,514ShareofAssociateCompany’s Profit/(Loss) 59,166 - - - - - 59,166 -IncomeTaxExpense 23,783 (21,916) (19,112) (17,421) 759 (60,123) 5,430 (99,460)NetProfit/(Loss) 693,482 662,639 172,110 89,378 98,707 180,137 964,299 932,054

(b) SegmentAssetsSegmentAssets 5,268,048 4,746,634 571,757 404,675 1,086,448 1,391,428 6,926,253 6,542,737

(c) SegmentLiabilitiesSegmentLiabilities 110,646 69,553 48,284 42,068 235,440 579,387 394,370 691,008

33 RISK MANAGEMENTOverviewNCAPGroupiswellawareoftheneedtohaveaneffectiveriskmanagementsystemandprocessesgiventhediversityofitsoperationsinthecapitalmarkets.TheGroupisinvolvedindiversefund-basedandfee-basedbusinessactivitiessuchasinvesting,investmentbanking,stockbrokingandwealthmanagement.TheinvestmentportfolioofNCAPmainlyconsistsoflistedequitysecurities,privateequity,fixedincomesecuritiesandunittrusts.

Risk Management StructureTheCompanyhasexposuretothefollowingrisksfromitsuseoffinancialinstruments: - Market Risk - Credit Risk and - Liquidity Risk

Anoverviewofmarketrisk,creditriskandliquidityriskasgivenbelow;▪ MarketRisk-Theriskofanyofinvestmentsperformingbadlyduetovolatilityofmarketprices.Applicabletoquotedequity

investmentsandfixedincomeinvestmentsclassifiedas"HeldforTrading".Suchvolatilitiesaredrivenbymacroeconomic variablessuchasinterestrates,exchangerates,inflationandcertainindustryspecificfactorstogetherwithsystematicrisks includingcreditrisk.Thesevolatilitiescanalsobedrivenbyinvestorsentiment.

▪ CreditRisk–Theriskoffinanciallossifadebtororcounterpartytofinancialinstrumentsfailstomeetitscontractual obligations.Creditriskismainlyarisingfrominvestmentsinfixedincomesecurities.


ThefollowingtableanalysestheInvestmentPortfolioofdebtsecuritiesbycreditrating. 2014 2013

Credit Rating % of Debt Securities % of Debt Securities BBBFitch 26% 0A-Lanka 20% 0AA-Lanka 17% 25%AA-Fitch 10% 13%BBBLanka 8% 7%BBB+Fitch 6% 18%A-Fitch 6% 17%ALanka 4% 19%A+Fitch 4% 3%

▪ LiquidityRisk-Theriskofnotmaintainingadequateliquidfundstomeetpaymentobligationsasandwhentheybecomedue.ThisriskislowgiventhedebtfreebalancesheetofNCAP.

Risk MitigationAsariskmanagementstrategy,allinvestmentsaresubjecttoanassetallocationpolicywhichprovidesforadequatelevelofdiversification.Thediversificationismonitoredandmanagedwithineachassetclassaswell.TheassetallocationpolicyisregularlyreviewedbytheAudit,RiskandComplianceCommittee,investmentcommitteeandtheboardofdirectors.

Theinvestmentsaremanagedbyateamofcompetentinvestmentprofessionalswhohavespecializedinspecificareas.Thespecificinvestmentsthatinvolveprivateequityandprojectfinancingaresubjecttoacomprehensiveinvestmentappraisalandduediligenceprocess.Further,suchinvestmentsgothroughatieredapprovalprocesswithfinalapprovalbeinggrantedbytheInvestmentCommitteeandtheNCAPBoard.ThestatusofinvestmentsandtheprocessarealsoreviewedregularlybytheInvestmentCommitteeandtheNCAPBoard.



34 MATURITY ANALYSISAnanalysisoftheAssetsandLiabilitiesbasedontheremainingperiodattheBalanceSheetdatetotherespectivecontractualmaturitydates,isasfollows:

Company within After 12 12 Months Months Total Rs.'000 Rs.'000 Rs.'000

Non Current AssetsProperty,PlantandEquipment - 11,743 11,743InvestmentinSubsidiaries - 995,080 995,080InvestmentinAssociate - 729,390 729,390IntangibleAssets - 283 283DeferredTaxAsset - 12,340 12,340

Other Non Current Financial AssetsAvailableforSaleFinancialInvestments-NonQuotedEquitySecurities - 185,000 185,000AvailableforSaleFinancialInvestments-QuotedEquitySecurities - 79,500 79,500HeldtoMaturityFinancialInvestments 803,207 803,207

Trade and Other ReceivablesNBTRefund - 9,182 9,182OtherReceivables 104,389 - 104,389IncomeTaxReceivable - 14,787 14,787

Other Financial Investments classified as Loans and ReceivablesInvestmentinDebentures 381,048 - 381,048

Financial Investments Held for TradingQuotedEquities 713,868 - 713,868InvestmentsinUnitTrusts 2,113,290 - 2,113,290

CashandBankBalances 22,936 - 22,936

Total Assets 3,335,531 2,840,512 6,176,042


34 MATURITY ANALYSIS (Contd.) Company within After 12 12 Months Months Total Rs.’000 Rs.’000 Rs.’000

Equity Attributable to Equity Holders of the ParentStatedCapital - 1,328,880 1,328,880Reserves - 343,170 343,170RetainedEarnings - 4,421,463 4,421,463 - 6,093,513 6,093,513

LiabilitiesEmployeeBenefitLiabilities - 2,914 2,914DeferredTaxLiability - 17,090 17,090OtherPayables 62,525 - 62,525 62,525 20,004 82,529TotalLiabilitiesandFundsEmployedasat31December2014 62,525 6,113,517 6,176,042



TEN YEAR SUMMARY - INCOME STATEMENT

Rs. Mn 2005* 2006 2007 2008 2009 * 2010 * 2011 * 2012 * 2013 * 2014 *

Revenue 4,300 2,030 560 668 535 665 300 6,606 1,469 1,417Benefits,LossesandExpenses (2,730) (4) - - - - - - -

Operating income 1,570 2,026 560 668 535 665 300 6,606 1,469 1,417

StaffCosts (401) - - - (19) (47) (42) (146) (261) (266)OperatingExpenses (291) - (5) (10) (16) (50) (53) (97) (145) (213)SellingExpenses (212) - - - - - - - - -Depreciation (72) - - - (1) (4) (5) (31) (31) (38)OtherExpenses (46) - - - - - - - - -(Provision)/Releasefor Non-performingInvestments andloans - (5) 4 8 - - - - - -

OperatingProfitbefore IntangibleItems 548 2,021 559 666 499 564 200 6,332 1,032 900

AmortisationofGoodwill (29) - - - - - - - - -

ProfitfromOperationsafter intangibleitems 519 2,021 559 666 499 564 200 6,332 1,032 900

FinanceCost (25) (9) - - - - - - - -ShareofAssociateCompany ProfitBeforeTax 7 - - - 352 340 400 455 - 59

Profit Before Tax 501 2,012 559 666 851 904 600 6,787 1,032 959

IncomeTaxExpense (26) (50) (149) (207) (277) (265) (205) (203) (99) 5

Profit after Taxation 475 1,962 410 459 574 639 395 6,584 933 964

NonControllingInterests (66) - - - (3) (35) (26) (22) - (0)

ProfitAttributabletoGroup 409 1,962 410 459 571 604 369 6,562 933 964

Earningspershare 9.35 44.74 9.34 10.47 13.00 13.77 9.04 8.30 26.15 29.31Dividendspershare-paid 0.70 10.70 1.20 2.85 3.13 2.25 4.10 1.25 16.40 8.50

*Group**Year2010,2011and2012figuresarerestatedtocomplywithIFRSreportingrequirments


TEN YEAR SUMMARY - STATEMENT OF FINANCIAL POSITION

Rs. Mn 2005 * 2006 2007 2008 2009 * 2010 * 2011 * 2012 * 2013 * 2014 *

Non-Current AssetsProperty,PlantandEquipment 296 - - - 12 12 10 47 35 62DeferredTaxAsset - - - - - - - - 9 28IntangibleAssets 998 - - - 5 8 43 49 35 48InvestmentsinAssociates - 741 741 741 1,141 1,261 1,411 - - 788OtherNonCurrentFinancialAssets 6,825 12 174 147 102 807 713 312 1073 1,491PolicyLoans 725 - - - - - - - - -OtherFundAssets 368 - - - - - - - - - 9,212 753 915 888 1,260 2,088 2,177 408 1,152 2,417

Current AssetsOtherReceivables 1,002 26 160 177 100 130 91 378 804 661TaxRecoverable 3 - - - - - - - - 24FinancialAssets 3,062 2,456 2,589 2,914 3,366 3,080 2,854 10,788 4429 3,630CashandBankBalances 598 - - 45 4 14 354 91 157 195 4,665 2,482 2,749 3,136 3,470 3,224 3,299 11,257 5,390 4,510Total Assets 13,877 3,235 3,664 4,024 4,730 5,312 5,476 11,665 6,542 6,927

EqUITY AND LIABILITIESEqUITYStatedCapital 1,329 1,329 1,329 1,329 1,329 1,329 1,329 1,329 1,329 1,329GeneralReserves 290 290 290 290 304 304 304 304 344 339AccumulatedProfits 660 1,598 1,956 2,289 2,976 3,482 3,672 9,923 4,179 4,864TotalEquity 2,279 3,217 3,575 3,908 4,609 5,115 5,305 11,556 5,852 6,532

NonControllingInterest 187 - - - 63 95 116 - - (0)

Non-Current LiabilitiesInterestBearingLoansandBorrowings 158 - - - - - - - - -Debentures - - - - - - - - - -Long-termInsuranceFund 9,238 - - - - - - - - -Non-Lifeinsurancereserve 859 - - - - - - - - -Otherfunds 368 - - - - - - - - -EmployeeBenefitLiabilites - - - - 3 3 4 16 28 43DeferredTaxLiability - - - - - - - - 21 19 10,623 - - - 3 3 4 16 49 62

Current LiabilitiesOtherPayables 612 18 89 116 55 99 51 93 577 316Reinsurancecreditors 125 - - - - - - - -IncomeTaxPayable - - - - - - - - 48 15InterestBearingLoansandBorrowings 51 - - - - - - - 16 2 788 18 89 116 55 99 51 93 641 333Total Equity and Liabilities 13,877 3,235 3,664 4,024 4,730 5,312 5,476 11,665 6,542 6,927

*Group**Year2011and2012figuresarerestatedtocomplywithIFRSreportingrequirments


SHAREHOLDER AND INvESTOR INFORMATION

STOCK ExCHANGE LISTINGNDBCapitalHoldingsLimitedwasdelistedfromtheofficiallistoftheColomboStockExchange(CSE)witheffectfrom26thJanuary2015.

SHAREHOLDERSThetwentylargestshareholdersasat31stDecember2014areasfollows:

No Name No. of sHares %

1. NATIONALDEVELOPMENTBANKPLC 32,778,572 99.62

2. SHARERESERVEACCOUNTFORTHEEXITOFFERMADEBYNATIONALDEVELOPMENTBANKPLC 89,612 0.27

3. MR.H.W.M.WOODWARD 6,225 0.019

4. MRS.F.A.A.MACK 6,000 0.018

5. MISS.F.B.GHOUSE 2,523 0.008

6. MR.A.KULENTHIRAN 2,500 0.008

7. MR.D.P.NAVARATNAM 1,737 0.005

8. MR.M.C.S.PERERA 1,200 0.004

9. MR.T.RODRIGO 1,199 0.004

10. MR.D.S.DESILVA 1,032 0.003

11. TARIKAINVESTMENTSPRIVATELIMITED 1,019 0.003

12. MR.K.M.S.M.RAZEEK 1,000 0.003

13. DR.S.SHANMUGAKUMAR 1,000 0.003

14. MRS.U. SHANMUGAKUMAR 800 0.002

15. MR.J.A.G.JAYAKODIARACHCHI 800 0.002

16. MISS.P.S.NADARAJAH 642 0.002

17. MR.S.M.MUBARAK 600 0.002

18 MR.C.R.NARANGODA 600 0.002

19. MR.M.A.T.J.FERNANDO 400 0.001

20 MR.K.P.JAYABANDU 300 0.001


SHAREHOLDER AND INvESTOR INFORMATION (Contd.)

ANALYSIS OF SHAREHOLDERSTherewere198shareholdersasat31stDecember2014distributedasfollows:

sHareHolDiNg segmeNt No. of sHareHolDers No of sHares %

1-1,000 187 13,314 0.04

1,001-10,000 9 23,435 0.07

10,001-100,000 1 89,612 0.27

100,001-1,000,000 0 0 0

Over1,000,000 1 32,778,572 99.62

AllHoldings 198 32,904,933 100.00

sHareHolDiNg Category No. of sHareHolDers No. of sHares %

Institutional 8 32,869,435 99.66

Individual 190 35,498 0.34

AllHoldings 198 32,904,933 100.00

Public holding as at 31.12.2014 – 0.38%

DIRECTOR’S SHAREHOLDING

NameNo. of sHares

31.12.2014 31.12.2013

AKPathirage - -

DSPWikramanayake - -

RTheagarajah - -

ARajakarier - -

MArsakularatne - -

FOzman N/A N/A

CVKulatilake - -

IWickramasinghe N/A -

SHARE vALUATIONTheclosingpriceofanordinaryshareon20thJune2014wasRs.496.40(lastdateoftradingontheCSE).

ThehighesttradedwasatRs.550.00pershareon07.03.2014andthelowestpricetradedwasatRs.460.00pershareon11.06.2014.


LIST OF TABLES, FIGURES, CHARTS AND ACRONYMS

taBles, figures aND CHarts pageFinancialHighlights 4NCAPGroup-OurBusinesses 17NCAPOrganisationChart 17NCAPConsolidatedPerformance 19GroupSegmentalRevenue2014 19NDBIBPerformance 19NDBWMPerformance 19NDBSPerformance 20EconomicGrowth 23Macro-EconomicOutlookforSriLanka 24RealGDPGrowth 24RealGDPGrowth(1977-2014) 25GovernmentExpenditure-2009 25GovernmentExpenditure-2014 25BudgetDeficit(%OfGDP) 26RevenueandExpenditure(%OfGDP) 26GovernmentDebttoGDP 26CompositionofPublicDebt 27InterestRates 27YieldCurve-TreasuryBillsandBonds 27PrivateSectorCreditGrowth 27BrentCrudePrice(USD/BBL) 28GlobalCompositeCarbonSteelPrice(USD/MT) 28AverageAnnualInflation(%) 28CurrentAccountDeficit(%OfGdp) 29CurrentAccountinFlows-2009 29CurrentAccountinFlows-2014 29ExchangeRate(Rs.USD) 30IndexReturns(2014) 30TrailingP/ERatios(31/12/2014) 30FundsRaisedthroughDebentures(Rs.Bn) 31NDBIB-CrisilIndexReturns(2014) 31NCAPStrategy,TargetsandAchievementsRisks 32TargetsVs.Actual2014 33


LIST OF TABLES, FIGURES, CHARTS AND ACRONYMS (Contd.)

taBles, figures aND CHarts pageNCAPOperationalPerformance 34NCAPOperationalHighlights-2014 35KeyPerformanceIndicators-NCAPGroup 35KeyAction2015 38NDBIBProductandServiceOffering 39NDBIBOperationalHighlights-2014 40KeyPerformanceIndicators 40FundsRaised(Rs.Bn) 41RevenueContribution2014 41NDBIBMilestones 44RecognitionandAwards 45NDBWMProductandServiceOfferings 47MutualFunds-RiskRatedFunds 47NDBWMOperationalHighlights2014 48KeyPerformanceIndicators 48TheFundManagementProcess 50UnitTrustsandAssetsUnderManagement-2010-2014 51RecognitionandAwards 52NDBSProductandServicesOfferings 53NDBSOperationalHighlights-2014 54KeyPerformanceIndicators 54EmeraldSriLankaFund1 57EligibilityCriteriaForInvestments 57FinancialReview 59CompanyPerformance 60CompanyRevenueComposition-2014 60ConsolidatedPerformance 60GroupSegmentalRevenue2014 61ReturnonEquity 61IdentificationofKeyStakeholders 63StakeholderPrioritisation 64KeyStakeholderEngagement 64-66


taBles, figures aND CHarts pageSustainabilityContextAssessment 68-70MaterialityAssessment 71-72MaterialityMatrix 73MaterialityDefiningReportContent 74NCAPGroupSharingValue 75ValueAddedStatement 76OurSimpleEnvironmentalInitiatives 83Cadre-LineofBusiness 84Cadre–EmployeeContract 84Cadre–EmployeeCategory 85Cadre–EmployeeGender 85Cadre–EmployeeEthnicity 85RecruitmentAnalysis 85TurnoverAnalysis 86PerformanceEvaluations 87KeyStructuredTrainingProgrammesSummary–2014 88OurBusinessEthics 90Compliance–InternalReportingStructure 91CodeofConductBroadAreasCovered 93ComplianceMonitoring 95RiskManagementStructure 98RiskDash-BoardsPrincipalandSubRiskCategories 99CorporateGovernanceRulesUndertheListingRulesoftheCSE 106-110GRIChecklist-G4 121-126ProfitsandAppropriations 128Directors’InterestinContractswiththeCompany 131CompositionoftheBoardAudit,RiskandComplianceCommittee 134TenYearSummary-StatementofFinancialPosition 178TwentyLargestShareholders 179AnalysisofShareholders 180Director’sShareholding 180


LIST OF TABLES, FIGURES, CHARTS AND ACRONYMS (Contd.)

aCroNyms full form ASPI AllSharePriceIndex

AWDR WeightedAverageDepositRate

AWLR WeightedAverageLendingRateBn BillionCAGR CompoundAnnualGrowthRateCCPI ColomboConsumerPriceIndexCEO ChiefExecutiveOfficerCSE ColomboStockExchangeCSR CorporateSocialResponsibilityDEG DeutscheInvestitions-undEntwicklungsgesellschaftmbHFMO NetherlandsDevelopmentFinanceCompanyGDP GrossDomesticProductGRI GlobalReportingInitiativeHR HumanResourcesIPO InitialPublicOfferingIFC InternationalFinanceCorporationKPIs KeyPerformanceIndicatorsM&A MergersandAcquisitionsMn MillionNCAP NDBCapitalHoldingsLimitedNDB NationalDevelopmentBankPLCNDBIB NDBInvestmentBankLimitedNDBWB NDBWealthManagementLimitedNDBS NDBSecurities(Private)LimitedNDBZ NDBZephyrPartnersPBV PricetoBookValuePE PriceEarningsRatioQ QuarterSEC Securities&ExchangeCommissionofSriLankaSMEs SmallandMediumEnterprisesS&PSL20 Standard&PoorSriLanka20IndexT-Bill TreasuryBillUS/USA UnitedStatesofAmericaYOY YearonYear


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notes


NOTICE OF MEETING

NoticeisherebygiventhattheThirtyFirst(31st)AnnualGeneralMeetingofNDBCapitalHoldingsLimited(theCompany)willbeheldattheAuditoriumoftheDHPLBuildingatNo.42,NavamMawatha,Colombo2onthe29thdayofJuneTwoThousandandFifteen(2015)at10.00AMforthefollowingpurposes:1. TolaybeforetheShareholdersforconsideration,theAnnualReportfortheyearended31stDecember2014.2. Tore-electintermsofArticle30oftheArticlesofAssociationMr.SarathWikramanayakewhoretiresintermsofthesaid

Article30.3. Tore-electintermsofArticle30oftheArticlesofAssociationMs.AruniRajakarierwhoretiresintermsofthesaidArticle30.4. Tore-appointintermsofArticle29(6)oftheArticlesofAssociationMr.FaizanOzman,whoretiresintermsofthesaidArticle

29(6).5. Tore-appointMessrsErnst&Young,CharteredAccountants,asAuditorsoftheCompanyassetoutinsection154ofthe

CompaniesActNo.7of2007andtoauthorizetheDirectorstodeterminetheirremuneration.6. ToauthorizetheBoardofDirectorstodeterminedonationsforthefinancialyear2015undertheCompaniesDonationsActNo.

26of1951.

ByorderoftheBoard

Ms. Mayomi SamarawickramaSecretary to the Board

Colombo18thMay2015

NOTES:1. Ashareholderentitledtoattendandvoteatthemeetingisentitledtoappointaproxyholdertoattendandvoteinhis/her

stead.2. AproxyholderneednotbeashareholderoftheCompany.3. TheFormofProxyissentherewith.ThecompletedFormofProxymustbedepositedattheRegisteredOfficeoftheCompany,

at40NavamMawatha,Colombo2notlaterthan48hourspriortothetimeappointedfortheholdingofthemeetinginaccordancewiththeArticle23(4)oftheArticlesofAssociationoftheCompany.

4. Shareholders/proxyholdersattendingthemeetingarerequestedtobringtheirNationalIdentityCards.


FORM OF PROxY

NDB CAPITAL HOLDINGS LIMITED

I/We……….…………………………………………………………………………...……..(NIC/s………………………………………………………………………..….......………) of………………………………………..…………………………….…………………..beingamember/membersoftheabove-namedcompanyherebyappoint..…………………………………………………………………….holderofNICNo………………………….....……………of…………………………………………… orfailinghim/her

Mr.AshokPathirage (Chairman)ofColombo,orfailinghimMr.SarathWikramanayake ofColombo,orfailinghimMr.RajendraTheagarajah ofColombo,orfailinghimMs.AruniRajakarier ofColombo,orfailingherMr.MalingaArsakularatne ofColombo,orfailinghimMr.FaizanOzman ofColombo,orfailinghimMr.VajiraKulatilake (CEO/Director)ofColombo.

asmy/ourproxytorepresent,voteand/orspeakforme/usandonmy/ourbehalfattheThirtyFirstAnnualGeneralMeetingofNDBCapitalHoldingsLimitedtobeheldon29thJune2015andatanyadjournmentthereofandateverypollwhichmaybetakeninconsequencethereof.

AswitnessI/Wehavesetmy/ourhand/shereuntothis…………………………dayof……………………TwoThousandandFifteen(2015).

.…………………………SignatureoftheMember/Members.


FORM OF PROxY (Contd.)

INSTRUCTIONS FOR COMPLETION OF THE FORM OF PROxY

1. Inordertoappointaproxyholder,thisformdulycompleted,bythemembermustbedepositedattheRegisteredOfficeofNDBCapitalHoldingsLTD(NCAP),atNo40NavamMawatha,Colombo2,notlessthan48hoursbeforethetimefixedforthemeeting.

2. InperfectingtheFormofProxy,pleaseensurethatalldetailsarelegible,includingthefullnameandregisteredaddressofthememberappointingtheproxy.

3. TheproxyholderappointedneednottobeamemberofNDBCapitalHoldingsLimited.4. InthecaseofaCorporateMember,theproxymustbeexecutedunderitscommonseal(ifapplicable)or

byitsauthorizedsignatoryorasprescribedbytheArticlesofAssociationofthecorporatemember.5. Thefirstjointholdershallhavethepowertosigntheproxywithouttheconcurrenceoftheotherjoint

holder/s.6. IftheformofProxyissignedbyanAttorney,acertifiedcopyoftherelevantPowerofAttorneyshould

accompanyit.

Corporate information

Design & Concept by: Optima Designs (Pvt) Ltd.Printed by: Printel (Pvt) Ltd.

nameNDB capital holdings limited (the company was registered under the companies act No.17 of 1982 and subsequently re-registered under the companies act of No 7 of 2007 on 26th December 2007)

LeGaL StatUSpublic limited liability company (De-listed from the official list of the Colombo Stock exchange on 26th January 2015)

inCorporation12th october 1983

reGiStereD nopQ 110pB

StateD CapitaLrs. 1,328,880,070

BoarD of DireCtorSMr. Ashok Pathirage (Chairman)Mr. rajendra theagarajahMr. Sarath WikramanayakeMr. Vajira Kulatilaka (CEO)Ms. Aruni RajakarierMr. Malinga ArsukularatneMr. Faizan ozman (Appointed w.e.f. 13/1/2015)Mr. Indrajit Wickramasinghe (Resigned w.e.f. 19/9/2014)

CompanY SeCretarYMs. Mayomi Samarawickrama(Attorney-at-Law)

reGiStereD offiCe40, Navam Mawatha, colombo 2

aUDitorSMessers ernst & Youngchartered accountants201, De saram place, colombo 10

BanKerSNational Development Bank PLC

memBerS of tHe BoarD CommitteeS aS at 31St DeCemBer 2014Investment CommitteeMr. Malinga Arsukularatne - ChairmanMs. Aruni RajakarierMr. rajendra theagarajah

Human Resources and Remuneration CommitteeMs. Aruni Rajakarier – ChairpersonMr. Ashok PathirageMr. Malinga Arsukularatne

Audit, Risk and Compliance CommitteeMs. Aruni Rajakarier – ChairpersonMr. Malinga ArsukularatneMr. Sarath Wikramanayake

ContaCt DetaiLSNDB Capital Holdings Ltd.No. 40,Navam Mawatha,colombo 2.tel: +94 11 2300385Fax: +94 11 2300393

NDB Securities (Pvt) Ltd.5th Floor, No. 40,Navam Mawatha,colombo 2.tel: +94 11 2314170Fax: +94 11 2314180

NDB Investment Bank Ltd.No. 40,Navam Mawatha,colombo 2.tel: +94 11 2300385Fax: +94 11 2300393

NDB Wealth Management Ltd.No. 42,Navam Mawatha,colombo 2.tel: +94 11 2303232Fax: +94 11 2303237

NDB Zephyr Partners Ltd.iFs court,twentryeight, cybercityebene,Maurutiustel: +230 467 3000Fax: +230 467 4000

NDB Zephyr Partners Lanka (Pvt) Ltd.No. 40,Navam Mawatha,colombo 2.tel: +94 11 2300385Fax: +94 11 2300393

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NDB capital holDiNgs ltD | aNNual report 2014

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ndb capital hol gs ual report 2014 - ndbch.com report 2014.pdf · refer materiality analysis, pages...

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