INTRODUCTORY DOCUMENT · 2016-09-29 · 8 Allianc inanc ompan LC Allianc inanc ompan LC 9 Introductory Document Alliance Finance Company PLC - Debenture are to be listed via Introduction

Alliance Finance Company PLC 1

Introductory Document

Level 18

Bank of Ceylon Merchant Tower 28, St. Michael’s Road

Colombo 03

INTRODUCTORY DOCUMENT ALLIANCE FINANCE COMPANY PLC

(For obtaining a listing of 10 Mn Unsecured Subordinated

Redeemable Debentures of LKR 100/= each issued by the Company)

To be listed on the Main Board of the CSE

Managers to the Introduction

2 Alliance Finance Company PLC Alliance Finance Company PLC 3

Introductory Document Introductory Document

Alliance Finance Company PLC - Debenture are to be listed via Introduction Page 1

INTRODUCTORY DOCUMENT This Introductory Document is dated ……………………….2013 This Introductory Document has been prepared by Merchant Bank of Sri Lanka PLC (Hereinafter sometimes referred to as “MBSL”) on behalf of Alliance Finance Company PLC (Hereinafter sometimes referred to as “the Company” or “AFC”) from the information supplied by the Company and its Directors and which is publicly available. The Company and its Directors having made all reasonable inquiries, confirm that to the best of their knowledge and belief the information contained herein is true and correct in all material respects and that there are no other material facts, the omission of which would make any statement herein misleading. While MBSL has taken reasonable care to ensure full and fair disclosure, MBSL does not assume responsibility for any investment decision made by the investors based on the information contained herein. When making investment decisions, prospective investors must rely on their own examination and assessments of the Company, including the risks involved. No dealer, sales person, or any other person or entity has been authorized to give any information or to make any representation not contained in this Introductory Document and if given or made such information or representations must not be relied upon as having been authorized by the Company or MBSL. The delivery of this Document shall not under any circumstance constitute a representation or create any implication or suggestion that there has been no material change in the affairs of the Company since the date of this Document.

If you are in any doubt regarding the contents of this document or if you require any advice in this regard, you should consult your Stock Broker, Bank Manager, Lawyer or any other Professional Advisor.

The Colombo Stock Exchange (CSE) has taken reasonable care to ensure full and fair disclosure of information in this Introductory Document. However, CSE assumes no responsibility for the accuracy of the statements made, opinions expresses or reports included in this Introductory Document.

INTRODUCTORY DOCUMENT

This Introductory Document is dated 12th November 2013

This Introductory Document has been prepared by Merchant Bank of Sri Lanka PLC (Hereinaftersometimes referred to as “MBSL”) on behalf of Alliance Finance Company PLC (Hereinaftersometimes referred to as “the Company” or “AFC”) from the information supplied by the Companyand its Directors and which is publicly available. The Company and its Directors having made allreasonable inquiries, confirm that to the best of their knowledge and belief the informationcontained herein is true and correct in all material respects and that there are no other material facts,the omission of which would make any statement herein misleading. While MBSL has takenreasonable care to ensure full and fair disclosure, MBSL does not assume responsibility for anyinvestment decision made by the investors based on the information contained herein. When makinginvestment decisions, prospective investors must rely on their own examination and assessments ofthe Company, including the risks involved.

No dealer, sales person, or any other person or entity has been authorized to give any information orto make any representation not contained in this Introductory Document and if given or made suchinformation or representations must not be relied upon as having been authorized by the Companyor MBSL.

The delivery of this Document shall not under any circumstance constitute a representation or createany implication or suggestion that there has been no material change in the affairs of the Companysince the date of this Document.

If you are in any doubt regarding the contents of this document or if you require any advice in thisregard, you should consult your Stock Broker, Bank Manager, Lawyer or any other ProfessionalAdvisor.

Alliance Finance Company PLC - Debenture are to be listed via IntroductionPage 1

TABLE OF CONTENTS

CORPORATE INFORMATION

DEFINITION / ABBREVIATIONS AND INTERPRETATIONS

1.0 INFORMATION CONCERNING THE DEBENTURE ISSUE 91.1 BACKGROUND 10

1.2 DETAILS OF THE ALLOTMENTS MADE 12

1.3 LISTING 12

1.4 INTEREST RATES AND DATES OF PAYMENT OF INTEREST 13

1.5 REDEMPTION OF THE DEBENTURES 14

1.6 PAYMENT OF THE PRINCIPAL SUM AND INTEREST 15

1.7 TRUSTEE TO THE DEBENTURE ISSUE 15

1.8 RIGHTS AND OBLIGATIONS ON THE DEBENTURES 16

1.9 TRANSFER OF THE DEBENTURES 17

1.10 RISK FACTORS SPECIFICALLY ASSOCIATED WITH THE DEBENTURES 18

1.11 BENEFITS OF INVESTING IN THE DEBENTURES 19

1.12 RATING OF THE INSTRUMENT 19

2.0 AN OVERVIEWOF THE COMPANY 202.1 HISTORICAL BACKGROUND 21

2.2 THE SERVICE LINES 23

2.3 BRANCH NETWORK 23

2.4 GROUP STRUCTURE 25

2.5 ASSOCIATE COMPANIES 25

2.6 FUTURE STRATEGIES 26

2.7 RISK ASSOCIATEDWITH THE FUTURE STRATEGIES 27

2.8 SHAREHOLDING STRUCTURE 27

2.9 THE BOARD OF DIRECTORS AS AT DATE OF THIS INTRODUCTORY DOCUMENT 28

2.10 DIRECTORS’ REMUNERATION 29

2.11 DIRECTORS’ INTERESTS 29

2.12 DIRECTORS’ SHAREHOLDING IN THE COMPANY 30

2.13 DIRECTORS’ INVOLVEMENT IN LITIGATION AND OFFENCES 30

2.14 SENIORMANAGEMENT 31

2.15 REMUNERATION OF THE SENIOR MANAGEMENT 34



Alliance Finance Company PLC Debenture are to be listed via IntroductionPage 3

CORPORATE INFORMATION

Name of the Company/Issuer Alliance Finance Company PLC

Legal Status A Public Limited Liability Company Incorporated in Colomboon 18th July 1956 under the Companies Ordinance No. 51 of1938 and presently registered under the Companies Act No. 07of 2007 and Quoted on the Colombo Stock Exchange.

A Licensed Finance Company in terms of Section 71 (3) of theFinance Business Act No. 42 of 2011 (Formerly registeredunder the Finance Companies Act No. 78 of 1988)

An Approved Credit Agency under the Mortgage Act No. 6 of1949 (as amended) and the Trust Receipt Ordinance No. 12 of1947 (as amended).

Company Registration No. PQ 93 (formerly PBS 326)

Registered Office “Alliance House”,84, Ward Place,Colombo 7.Tel: (94) 0112 673673Fax: (94) 0112697205E‐mail: [email protected]

Credit Rating (Company): Long Term Rating of BBB

Rating Agency RAM Ratings (Lanka) Ltd

Board of Directors Mr. Sunil Karunanayake ‐ ChairmanMr. R. K. E. P De Silva ‐ Deputy Chairman &Managing DirectorMr. D. L. S. R. Perera ‐ Finance DirectorMrs. R. N Ponnambalam – Non‐Executive DirectorMr. Athula R Samarasinghe – Non‐ Executive Director

Company Secretary/ies Alliance Management Services (Pvt) LtdNo 84, Ward PlaceColombo 07

External Auditors/Reporting M/s HLB Edirisinghe & CoAccountants Chartered Accountants

45, (2nd Floor), Braybrooke StreetColombo 02.


2.16 HUMAN RESOURCES 342.17 DEGREE OF DEPENDENCE ON KEY CUSTOMERS AND SUPPLIERS 352.18 STATED CAPITAL 352.19 CORPORATE GOVERNANCE PRACTICES 362.20 LITIGATION, DISPUTES AND CONTINGENT LIABILITIES 372.21 INSPECTION OF DOCUMENTS 38

3.0 DECLARATIONS 393.1 DECLARATION BY THE COMPANY 403.2 DECLARATION BY THE DIRECTORS 41

ANNEXURE

ANNEXURE – I AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011ANNEXURE – II AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2012ANNEXURE – III AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2013ANNEXURE – IV INTERIM FINANCIAL STATEMENTS AS AT 30 JUNE 2013ANNEXURE – V RATING REPORT




Internal Auditors KPMG & Co, Chartered Accountants 32A, Sir Mohamed Marker Mawatha Colombo Legal Consultants / Lawyers M/s Gunawardena & Ranasinghe Associates, Attorneys-at-Law M/s Sudath Perera Associates, Attorneys-at-Law Principal Banker Sampath Bank PLC

City office No 55, D R Wijewardena Mawatha Colombo 10


DEFINITIONS / ABBREVIATIONS AND INTERPRETATIONS

In this Introductory Document the following Definitions / Abbreviations and interpretations applyunless the subject or context otherwise requires.

AFC / Company Alliance Finance Company PLC

Bn Billion

CAGR Compound Annual Growth Rate

CBSL Central Bank of Sri Lanka

CDS Central Depository Systems (Pvt) Ltd

CSE Colombo Stock Exchange

Date/s of Allotment The date/s on which the Debentures were alloted to the Debenture holders

Date/s of Maturity In respect of Debentures of Types A and B the date on which a period ofFive (05) Years from the date of allotment expires,

In respect of Debentures of Type C the date on which a period of Three (03)Years from the date of alloment expires,

In respect of Debentures of Type D the date on which a period of Four (04)Years from the date of alloment expires,

Date/s of Redemption The date/s of Maturity of the Debentures or such earlier date on which theDebentures are redeemed or become payable in terms of the Trust Deedexecuted between the Company and the Trustee, as amended.

Debentures Unsecured Subordinated Redeemable Debentures of LKR 100 each issued bythe Company, in terms of the Prospectus dated 31 May 2012 as amended byAddendum dated 16 October 2012 issued by the Company

Debenture Holders The Holders for the time being of the Debentures whose names are for thetime being entered as holders of Debentures in the Register or in the case ofthe Debentures being listed in the CSE the persons in whose account theDebentures are lodged in the CDS as at the relevant date.

Issue Issue of Debentures of AFC in terms of the Prospectus dated 31st May 2012as amended by the Addendum dated 16 October 2012 issued by the Companyand allotted on the dates mentioned in this Introductory Document

Issue Price LKR 100 per Debenture of any type

Issuer Alliance Finance Company PLC




LKR Sri Lankan Rupee

Market Date Any day on which trading takes place at the CSE

Mn Million

POA Power of Attorney

Prospectus Prospectus publised by AFC dated 31 May 2012 as amended by the Addendum dated 16 October 2012 in respect of the Issue of upto 10,000,000 Unsecured Subordinated Redeemable Debentures of the Company.

Redemption Repayment of the principal sum on the Debentures

Register The Register of the Debenture Holders to be maintained by the Company

Registered Address When used in relation to a Debenture Holder means the respective address of the Debenture Holder as registered in the Register. In the case of the Debentures lodged with the CDS the registered address shall be deemed to be the address provided by the Debenture Holders to the CDS.

SEC Securities & Exchange Commission of Sri Lanka

Subordinated The claims of the Debenture holders shall in the event of winding up of the Company rank after all the claims of the Secured and other Unsecured Creditors of the Company and any preferential claims under any Statutes governing the Company but in priority to and over the claims and rights of the Shareholders of the Company.

Tier II Capital Supplementary capital representing revaluation reserves, general provisions and other capital instruments which combine certain characteristics of equity and debt such as hybrid capital instruments and subordinated term debts.

Trustee Deutsche Bank AG, Colombo Branch Trust Deed The Trust Deed dated 17 May 2012 executed between the Company and the

Trustee, Deutsche Bank AG, Colombo Branch as amended by the Addendum to the said Trust Deed executed between AFC and the Trustee on 04 October 2012

Working Day Any day (other than a Saturday or a Sunday or any statutory holiday) on which the Banks are open for business in Sri Lanka.

1.0 INFORMATION CONCERNING THE DEBENTURE ISSUE




of determination/renewal of the interest rate, payable Annually as at 31st Decembereach year from the date of allotment of the Debentures, until the date of Maturity/

REDEMPTION OF THE DEBENTURES.

The above mentioned Debentures rank equal and pari passu with each other without any preferenceor priority one over the other, except for the dates of Maturity of the Debentures, Interest Rates andthe frequency at which the interest is paid. The said debentures are being assigned BBB‐ long termrating by Ram Rating (Lanka)Ltd (Rating Report is attached).

The said Debenture Issue was opened on 01 June 2012 and was closed on 29 November 2012 afterbeing fully subscribed. As these Debentures are fully paid, based the Exchange Control Act &Directions, Non Residents can invest up to 100% in the Debentures without any restriction after thelisting of the debenture on the Colombo Stock Exchange.

The Company issued the said Debentures for the following purposes:‐

a. To increase the Tier II Capital of the Company in order to enhance its Capital AdequacyRatio and Single Borrower Limit.

Pursuant to this Debenture Issue the Tier II of the Company has been increased asfollows.

Tier II as at 30.06.2012: 12.47%

Tier II as at 31.08.2013: 17.77%

b. To expand the Branch network.As at 30 June 2012 there were 20 branches located and this has been expanded to 31 atthe end of August 2013.

c. To strengthen the Company’s liquidity position and minimize the risk and gap exposurein the Company’s assets/liabilities portfolios


1.1 BACKGROUND

In terms of the Prospectus dated 31 May 2012 as amended by the Addendum dated 16 October 2012issued by Alliance Finance Company PLC (hereinafter sometimes referred to as the Company or AFC)the Company invited the public to make applications for subscription of Five Million (5,000,000)Unsecured Subordinated Redeemable Debentures of LKR 100/- each of the Company, with an optionto issue upto a further Five Million (5,000,000) Debentures in the event of an oversubscription. Thesaid Debentures were categorized as Debentures of Types A, B, C and D as described below.

Type A Unsecured Subordinated Redeemable Five (05) year Debentures of LKR 100/- eachbearing interest at a fixed rate of Twenty percent (20.00%) per annum beforewithholding tax on the principal sum, payable Monthly as at the last day of each andevery Calendar month from the date of allotment of the Debentures until the date ofMaturity/ Redemption of the Debentures. (Annual effective rate of 21.94% on theprincipal sum)

Type B Unsecured Subordinated Redeemable Five (05) year Debentures of LKR 100/- eachbearing interest on the principal sum at a Floating rate calculated and renewed onthe basis that the effective rate of interest per annum in respect of Debentures ofType B shall be equivalent to Three point Five percent (3.50%) above theWeighted Average One (01) Year Treasury Bill Rate (before Withholding Tax)at the last Primary Auction as announced/published by the Central Bank of Sri Lankaimmediately before the date of determination/renewal of the interest rate, payableMonthly as at the last day of each and every Calendar month from the date ofallotment of the Debentures, until the date of Maturity/ Redemption of theDebentures.

Type C Unsecured Subordinated Redeemable Three (03) year Debentures of LKR 100/-each bearing interest at a fixed rate of Eighteen point Five percent (18.50%) perannum before withholding tax on the principal sum, payable Quarterly as at 31stMarch, 30th June, 30th September and 31st December each year from the date ofallotment of the Debentures, until the date of Maturity/ Redemption of theDebentures. (Annual effective rate of 19.82% on the principal sum)

Type D Unsecured Subordinated Redeemable Four (04) year Debentures of LKR 100/- each bearinginterest on the principal sum at a Floating Rate calculated and renewed on the basis that theeffective rate of interest per annum in respect of Debentures of Type D shall beequivalent to Three percent (3%) above the Weighted Average One (01) YearTreasury Bill Rate (before Withholding Tax) at the last Primary Auction asannounced/published by the Central Bank of Sri Lanka immediately before the dateof determination/renewal of the interest rate, payable Annually as at 31st Decembereach year from the date of allotment of the Debentures, until the date ofMaturity/Redemption of the Debentures.




An application has been made to the CSE and approval in-principle has been obtained to deal in and for a listing of the said Ten Million (10,000,000) Unsecured Subordinated Redeemable Debentures of the Company on the Main Board of the CSE. Even though the Trust Deed and the Debenture Certificates refer to these Debentures as Debentures of Types A, C and D, pursuant to the listing of these Debentures on the CSE these Debentures would be categorized by unique identification codes by the CSE set out in the table under section 1.2 of the Introductory Document. 1.4 INTEREST RATES AND DATES OF PAYMENT OF INTEREST Interest on these Debentures is payable at the rates mentioned below;

Type A Interest on these Debentures is payable monthly as at the last day of each and every Calendar month from the date of allotment of the Debentures at a fixed rate of Twenty percent (20.00%) per annum (before withholding tax) on the principal sum, until the date of Maturity/Redemption of the Debentures (Annual effective rate of 21.94% on the principal sum).

Type C Interest on these Debentures is payable quarterly as at 31st March, 30th June, 30th September and 31st December each year from the date of allotment of the Debentures at a fixed rate of Eighteen point Five percent (18.50%) per annum (before withholding tax) on the principal sum, until the date of Maturity/Redemption of the Debentures (Annual effective rate of 19.82% on the principal sum).

Type D Interest on these Debentures is payable annually as at 31st December each year from the date of allotment of the Debentures until the date of Maturity/Redemption of the Debentures at a floating rate on the principal sum calculated and renewed on the basis that the effective rate of interest per annum in respect of Debentures of Type D shall be equivalent to Three percent (3%) above the Weighted Average One (01) Year Treasury Bill Rate (before Withholding Tax) at the last Primary Auction as announced/published by the Central Bank of Sri Lanka immediately before the date of determination/renewal of the interest rate.

The Floating Rate of Interest will be calculated and renewed on the same basis annually with effect from 01st January each year until the date of maturity/redemption of the Debentures. PROVIDED that if such Weighted Average One (01) Year Government of Sri Lanka Treasury Bill Interest Rate is not announced/published by the Central Bank of Sri Lanka for a period of Twelve (12) months immediately preceding to the date of determination/renewal of the floating rate of interest in respect of a particular period, the Company shall in consultation with the Trustee calculate the interest rate applicable based on the One (01) Year Average Weighted Deposit Rate (AWDR) published by the Central Bank of Sri Lanka immediately prior to the date of determination/renewal of the floating rate of interest for the respective period.


1.2 DETAILS OF THE ALLOTMENTS MADE

The Details of the Allotments made in respect of the said Debenture Issue is given below.

1.3 LISTING

The Board of Directors of AFC at their meeting held on 31 January 2013 resolved to list the said TenMillion (10,000,000) Debentures on the Colombo Stock Exchange by way of an Introduction.

DebentureType

Date ofAllotment

No ofDebenturesAllotted

(@ LKR 100/per Debenture)

Value ofLKR

No ofInvestors

Date ofMaturity

CSE ID / Description

A

02 July2012 4,300 430,000 03 01 July 2017 ALLI01/07/17A20

02 August2012 113,800 11,380,000 18 01 August

2017ALLI01/08/17B20

03September

201249,800 4,980,000 11 02 September

2017ALLI/02/09/17C20

01 October2012 1,225,400 122,540,000 15 30 September

2017ALLI30/09/17D20

01November

20123,276,600 327,660,000 37 31 October

2017ALLI31/10/17E20

01December

20122,854,800 285,480,000 64 30 November

2017ALLI30/11/17F20

Total 7,524,700 752,470,000 148

B ‐ ‐ ‐ ‐ ‐

Total 0 0.00 00

C

02 July2012 500 50,000 01 01 July 2015 ALLI01/07/15G18.5

02 August2012 7,900 790,000 31 01 August

2015ALLI01/08/15H18.5

03September

20121,009,500 100,950,000 24 02 September

2015ALLI02/09/15I18.5

01 October2012 2,700 270,000 08 30 September

2015ALLI30/09/15J18.5

01November

20121,402,300 140,230,000 04 31 October

2015ALLI31/10/15K18.5

01December

201252,300 5,230,000 04 30 November

2015ALLI30/11/15L18.5

Total 2,475,200 247,520,000 72

D02 August

2012 100 10,000 01 01 August2016

ALLI01/08/16M16.89

Total 100 10,000 01

Grand Total 10,000,000 1,000,000,000 221




Interest payments shall fall due on the last day of the respective interest payment cycle.

Interest payments shall be made by the Company in accordance with the provisions contained in the Trust Deed. Upon the Debentures being listed on the CSE, interest payments shall be made by the Company within Three (03) Market days from the due date, except the final interest payment which will be made with the repayment of the Principal monies on the date of maturity/redemption of the Debentures in accordance with the provisions contained in the Trust Deed. In order to accommodate the Debenture interest cycles in the Automated Trading System, interest payments shall not include the Debenture holders holding Debentures in the Debt Securities Trading System as at the last day of the payment cycle but one day prior to the due date of interest (entitlement date). If the entitlement date is a holiday, interest shall be calculated including the entitlement date. Interest calculation shall be based upon the actual number of days in each interest payment period (Actual/Actual). For the purpose of computation of interest a year will comprise of 365 days. These Debentures were issued prior to 01 January 2013, as such the interest payments are liable for Withholding Tax (WHT). 1.5 REDEMPTION OF THE DEBENTURES

The Company shall redeem the said Debentures on the dates of Maturity of such Debentures or on such earlier date on which the Debentures are redeemed or become payable in accordance with the provisions contained in the Trust Deed. The Company may at its option with the prior written consent of the Central Bank of Sri Lanka and the approval of the holders of 3/4th of the nominal value of the Debentures outstanding redeem the Debentures on any date before the date of maturity of the Debentures in accordance with the provisions contained in the Trust Deed.

The Debenture holders shall not have any right or option to call for redemption of the Debentures before the date of maturity of such Debentures, except in the circumstances where the Debentures have become immediately payable in terms of Clause 12.1 of the Trust Deed.

Repayment before maturity of the principal sum on the Debentures in any circumstance mentioned in Clause 12.1 of the Trust Deed shall be subject to the prior approval of the holders of 3/4th of the nominal value of the Debentures outstanding at that time and the prior written consent of the Central Bank of Sri Lanka.

On the date of Maturity/Redemption of the Debentures the Company shall in accordance with the provisions contained in the Trust Deed pay to the Debenture holders the principal sum of the Debentures which ought to be redeemed and interest (if any) remaining unpaid up to the date of Maturity/Redemption of the Debentures.


If the date of Maturity/Redemption falls on a non-working day on which the Banks are closed for business in Sri Lanka, then the Debentures shall be redeemed without any additional interest on the next working day when the Banks are open for business in Sri Lanka.

1.6 PAYMENT OF THE PRINCIPAL SUM AND INTEREST Payment of the principal sum and interest on the Debentures will be made after deducting any withholding tax and/or any other taxes and charges thereon (if any) in Sri Lankan Rupees to the Debenture holders (in the case of joint Debenture holders to the one whose name stands first in the register of Debenture holders) registered as at the due date of interest/ Principal Sum by crossed cheques marked “Account Payee Only” sent by ordinary mail to their registered addresses at the risk of such Debenture holders.

If any Cheques issued in respect of Interest payments or redemption of Debentures sent by the post to the Debenture Holders are returned to the Company undelivered, the amounts represented by each of such returned Cheques shall be transferred by the Company to a suspense account at the end of 90 days after the date of Maturity/ Redemption of the Debentures and retained therein for a period of Six (06) Years from the date of Maturity / Redemption of the Debentures.

Such monies shall be repaid to the Debenture Holder if the same is claimed in writing by such Debenture Holder within the aforesaid Six (06) Years.

No person shall be entitled to claim any such Interest payment or Principal Sum on the Debentures after the completion of Six (06) Years from date of Maturity / redemption of the Debentures and all unclaimed monies shall cease to be owed and payable by the Company to a Debenture Holder after the expiry of the aforesaid period of Six (06) Years. 1.7 TRUSTEE TO THE DEBENTURE ISSUE

Deutsche Bank AG, Colombo Branch has been appointed as the Trustee to this Debenture Issue. The Company and the Trustee have executed a Trust Deed on 17 May 2012 which was amended subsequently by execution an Addendum to the said Trust Deed on 04 October 2012.

The rights and obligations of the Trustee are set out in the said Trust Deed.

The said Trust Deed could be inspected by the public during normal working hours at the Registered Office of the Company. The said Trust Deed will also be hosted on the web sites of the Company and CSE at least Seven (07) Market days prior to the submission of the Declaration referred to in Appendix 2D of the Listing Rules of the CSE until the date of Maturity of the Debentures. There is no conflict of interest between the Company and the Trustee and its Directors.




(c) CSE approval in respect of the Listing would be obtained prior to the printing of the

Introductory Document, when making payment of the Principal sum and interest on the Debentures, the Company shall always act on the information furnished by the CDS and it shall be the responsibility/obligation of each Debenture holder to keep all the information in respect of such Debenture holder updated in the CDS. The Debenture holder shall also absolve the Company, CDS and CSE from any responsibility or liability in respect of any error or absence of any necessary changes initiated by the Debenture holders in the information recorded with the CDS.

1.9 TRANSFER OF DEBENTURES

1. These Debentures shall be freely transferable and the registration of such transfer shall not be subject to any restriction, save and except to the extent required for compliance with statutory requirements.

2. A change of ownership of these Debentures shall be in writing under the hand of the Debenture holder (or where appropriate by persons authorized by law to do so) and of the transferee and shall be delivered to (along with the Debenture Certificate) and retained by the Company. Subject to such of the restrictions as set out above as may be applicable all transfers of Debentures may be affected by instrument in writing in any usual or common form. The Company may demand a fee of LKR 500/- for any registration of any change of ownership of the Debentures. No transfer will be registered unless the duly perfected transfer form along with the Debenture Certificate and Stamp Duty, if any, payable is presented to the Company Secretary, who will maintain a Register of the Debenture holders. CSE approval in respect of the Listing would be obtained prior to the printing of the Introductory Document these Debentures shall be freely transferable and transmittable through the CDS so long as the Debentures are listed in the CSE and the registration of such transfer shall not be subject to any restriction, save and except to the extent required for compliance with statutory requirements.

Subject to the provisions contained herein, the Company may register without assuming any liability any transfer of Debentures, which are in accordance with the statutory requirements and rules and regulations in force for the time being as laid down by CSE, SEC and CDS.

3. In the case of the death of a Debenture holder,

The survivor where the deceased was a joint holder; and The executors or administrators of the estate of the deceased or where the

administration of the estate of the deceased is in law not compulsory, the heirs of the deceased where such Debenture holder was the sole or only surviving holder; shall be the only persons recognized by the Company as having any title to his/her Debentures.


1.8 RIGHTS AND OBLIGATIONS ON THE DEBENTURES

Rights of the Debenture Holders

a) The holders of these Debentures are entitled to,

receive the Principal sum on the date of Maturity/Redemption and Interest on theDebentures as per the provisions contained in the Trust Deed.

call, receive notice, attend and vote at the Meetings of the Debenture holders inaccordance with the provisions contained in the Trust Deed

b) The rights of these Debenture holders for receipt of the Principal Sum and any accruedinterest on these Debentures in the event of winding up of the Company would besubordinated to the rights of the Secured and other Unsecured Creditors of the Company andany preferential claims under any Statutes governing the Company.

Therefore, the claims of these Debenture holders shall in the event of winding up of theCompany rank after all the claims of the Secured and other Unsecured Creditors of theCompany and any preferential claims under any Statutes governing the Company but inpriority to and over the claims and rights of the Shareholders of the Company.

c) The other rights of the holders of these Debentures are set out in the Trust Deed

d) The Holders of these Debentures are not entitled toAny privileges or rights of the Shareholders of the Company, including the right to

o receive notice , attend and vote at the General Meetings of the Company

o receive any dividend or distributions or share the profits of the Company

o participate in any surplus assets of the Company in the event of liquidation

Any privileges or rights of the holders of any other Debentures issued by theCompany, including the right to receive notice, attend and vote at the Meetings ofholders of other Debentures issued by the Company

Obligations on the Debentures

(a) These Debentures are unsecured obligations of the Company.

(b) The Company shall repay the Principal sum on the date of Maturity/ Redemption andInterest on the Debentures as per the provisions contained in the Trust Deed andcomply with all other terms and conditions stipulated in the said Trust Deed inrespect of these Debentures.




4. Any person becoming entitled to any Debenture in consequence of bankruptcy or winding up of any Debenture holder, upon producing proper evidence that such Debenture holder sustains the character in respect of which such Debenture holder proposes to act or such Debenture holder’s title as the Board of Directors of the Company thinks sufficient, may at the discretion of the Board be substituted and accordingly registered as a Debenture holder in respect of such Debentures subject to the applicable laws, rules and regulations pertaining to the Company, CDS, CSE and SEC.

5. No change of ownership in contravention of these provisions will be recognized by the Company.

1.10 RISK FACTORS SPECIFICALLY ASSOCIATED WITH THE DEBENTURES

Holders of these Debentures will be exposed to the following risks. (It is vital to note however that these risks are not unique to these Debentures and apply generally to any unsecured fixed income security, fixed deposit or any other term or money deposit.) Interest Rate Risk

The price of a typical Debenture will change in the opposite direction to a change in the market interest rates assuming all other factors are equal. “Market interest rate” refers to interest rate expected by the investors for investments with similar maturity and risk profile. As market interest rates rise, price of the Debenture may fall and as market interest rates fall, the price of the Debenture may rise. This uncertainty is known as interest rate risk.

Further, if the floating interest rates in respect of the Debentures rise above the fixed interest rate of the Debentures, the holders of Debentures having floating interest rate will gain more than the fixed interest rate investor whilst if the floating interest rates fall below the fixed interest rate of the Debentures of, the holders of Debentures having floating interest rate will gain less than the fixed rate investors. Reinvestment Risk

The investors may decide to reinvest the interest payment and earn interest on interest. Depending on the prevailing market interest rates, the Debenture holder may be able to reinvest the paid interest as a higher or lower interest rate than that is offered by these Debentures. The uncertainty is known as “reinvestment risk”.

Default Risk

Default risk also known as Credit risk, refers to the risk that the issuer of a Debenture may default, i.e. the issuer will be unable to pay interest and principal when due. It is advisable for prospective investors to take into account the past performance, earnings and asset growth performance of the Company, present financial strengths as reflected in the Balance Sheet of the Company, its Risk Management Policies, Rating of the Company, Rating of these Debentures and the highly experienced


and skilled Directors and Senior Management Team and also the blooming growth of the Company in the recent past, when forming an opinion on Default Risk. Liquidity Risk Liquidity Risk refers to the ability to encash the Debentures by selling it whenever the Debenture holder deems it necessary. If these Debentures are not listed on the CSE, investors will be unable to sell them in the secondary market at any given point of time and convert them to cash. But if the Debentures are listed on the CSE, the respective investors will be able to sell these Debentures on the secondary market at any given point of time and convert them to cash. 1.11 BENEFITS OF INVESTING IN THE DEBENTURES

An attractive interest income for a period of 3-5 years, monthly, quarterly or annually, based

on the type of the Debentures.

Debentures listed on the CSE could be used as a collateral to obtain credit facilities from the banks and financial institutions

1.12 RATING OF THE INSTRUMENT

RAM Ratings (Lanka) Limited (RAM) has assigned a long term rating of BBB- to these Debentures.




2.0 An Overview of the Company 2.1 HISTORICAL BACKGROUND

Alliance Finance Company PLC which was incorporated in July 1956 is amongst the foremost companies in the Registered Finance Companies sector of the Sri Lankan financial industry. The Company was founded by late Mr. Eardley de Silva and its original Board included Chairman - Mr. Eardley de Silva, Managing Director-Mr. Heyward Fernando, Mr. Fred Perera, Mr. Hayes Jayasundara and Mr. N.M. Appuhami. In the year 1959, the Company was quoted on the Colombo Stock Brokers Association. Mr. S. Karunanayake, the present Chairman, joined the Board on 26 January 2012 and was appointed as Chairman on 01 June 2013.

As a pioneer in the financial industry the Company counts for over 56 years of steady performance and growth and has an enviable record of confidence, trust and excellence with a distinctive brand image in the registered finance companies sector. The Company has inspired the confidence of its investors / depositors over generations and achieved ISO Certification in the year 2000 and won the GOLD award in the Non-banking and Financial Services category and the SILVER award for Excellence in Performance Management Practices across all categories and sectors at the National Business Excellence Awards 2012 organised by the National Chamber of Commerce of Sri Lanka. These awards are a testament to Company’s winning philosophy, the right business practices, ethics and an ethos of pursuing excellence which ensures that the Company is among the best in the finance sector.

Alliance Finance Company PLC (AFC) is widely acclaimed as a Financial Institution with discipline, professional management and high levels of customer satisfaction, care and loyalty. The Company possesses a BBB (positive outlook) / P2 Ram Rating and practice high levels of Corporate Governance.

2.0 AN OVERVIEW OF THE COMPANY




To play a key role in the development of post war Sri Lanka by being a leading provider of innovative Finance, Investment and Transport solutions to the entire nation, with particular emphasis on enabling financial inclusion and equitable wealth creation outside the Western Province.

As one of the pioneering organizations in the registered License Finance Companies sector, AFC is deeply committed to the above vision. AFC believes that hands on leadership, deployment of a unique combination of resources and creative strategic thinking powered by innovation will enable the realization of its vision. This is further reinforced by relationships built on five decades of trust and core values and principles spanning over three generations that has enabled AFC achieving unparallel rates of re–investment in its deposit base .

V A

L U

E S

- AFC places the confidence, trust and loyalty of the valued investors

and depositors at the highest level of priority.

- Careful balance between progression and control and disciplined

imagination

- Achieve very high standards of quality in all initiatives

- Employee satisfaction and Customer satisfaction as important

corporate goals and principal drivers of financial success

- Corporate social Responsibility based on long term sustainability Alliance Finance Company PLC - Debenture are to be listed via Introduction Page 20

2.2 THE SERVICE LINES As the leading provider of the most trusted and innovative Investment and Transport solution in the country and with over 56 years of experience in the field of financing AFC is offering a wide range of services to the nation.

PRODUCTS & SERVICES

Product Type Product

Deposits

Lending

Micro Finance

2.3 BRANCH NETWORK

AFC has strengthened its operations through a well established branch network, totaling to 85 branches all over the Island. The Company accelerated the expansion strategy during last few years. The Company also succeeded in reaching the cash rich North & East provinces during last few years. With opening these branches AFC has enhanced its market position and it has also positively contributed to its business growth.




AFC Branch network is categorized as follows:-

Main Branch 29

Collection / Service Centers 11

Pawning Centers 45

Total 85


2.4 GROUP STRUCTURE Alliance Finance Company PLC functions as the holding company of the AFC group and it comprises 02 Associate Companies.

2.5 ASSOCIATE COMPANIES

Macbertan (Pvt) Limited Macbertan (PVT) Limited is a young and dynamic company which became the pioneer of manufacturing of Thermal and Impact Insulation products in Sri Lanka. It is a strategic collaboration between Mclarens Group of Companies and the House of Alliance, two well-known renowned commercial establishments in Sri Lanka. Over the Past 07 years, Macbertan has steadily launched a range of polymer, products, which have gained popularity for its varied in industrial as well as domestic applications. Alfinco Insurance Brokers (Pvt) Limited Alfinco Insurance Brokers (Pvt) Ltd is a member of the Alliance Group of Companies and a collaboration between Alliance Finance Company PLC, at the first, ISO 9001: 2000 Certified Finance Company in Sri Lanka and Arpico Finance Company PLC, both of whom have a rich history and have been in successful business operations in excess of fifty long years in the financial markets in the country. Alfinco Insurance Brokers was founded on October 08, 1998 primarily to facilitate the in house business that is generated through its lease business. Over the years Alfinco Insurance has steadily progressed and is presently rated amongst the top ten of the 53 registered insurance brokers in the industry as per the IBSL premium ratings for Insurance brokers for the year 2011.

MACBERTAN (PVT) LTD

ALFINCO INSURANCE BROKERS (PVT) LTD

Alliance Finance Company PLC

30% 39%


2.4 GROUP STRUCTURE Alliance Finance Company PLC functions as the holding company of the AFC group and it comprises 02 Associate Companies.

2.5 ASSOCIATE COMPANIES

Macbertan (Pvt) Limited Macbertan (PVT) Limited is a young and dynamic company which became the pioneer of manufacturing of Thermal and Impact Insulation products in Sri Lanka. It is a strategic collaboration between Mclarens Group of Companies and the House of Alliance, two well-known renowned commercial establishments in Sri Lanka. Over the Past 07 years, Macbertan has steadily launched a range of polymer, products, which have gained popularity for its varied in industrial as well as domestic applications. Alfinco Insurance Brokers (Pvt) Limited Alfinco Insurance Brokers (Pvt) Ltd is a member of the Alliance Group of Companies and a collaboration between Alliance Finance Company PLC, at the first, ISO 9001: 2000 Certified Finance Company in Sri Lanka and Arpico Finance Company PLC, both of whom have a rich history and have been in successful business operations in excess of fifty long years in the financial markets in the country. Alfinco Insurance Brokers was founded on October 08, 1998 primarily to facilitate the in house business that is generated through its lease business. Over the years Alfinco Insurance has steadily progressed and is presently rated amongst the top ten of the 53 registered insurance brokers in the industry as per the IBSL premium ratings for Insurance brokers for the year 2011.

MACBERTAN (PVT) LTD

ALFINCO INSURANCE BROKERS (PVT) LTD

Alliance Finance Company PLC

30% 39%




Having established itself with the in house business segments of its parent companies, Alfinco Insurance is at present venturing into other identified strategic corporate and personal line markets with the experience gathered over the years. Presently Alfinco Insurance operates through all fifty three branches/ collection and gold loan centers strategically located island wide of the group using the group synergy to forge a head in a tough and challenging economy. Alfinco Insurance has steadily grown into the non motor and non lease markets, focusing primarily on the corporate business sector. This segment prefers the usage of a professional insurance intermediary to handle their insurance portfolios as in mature markets such as the UK, Europe and USA, for Insurance solutions especially when large risks are at stake. Today Alfinco Insurance has a clear vision and is renowned for its Trust, Advice and Professionalism in the market. 2.6 FUTURE STRATEGIES Alliance Finance Company PLC is well positioned to exploit post-war economic prosperity of the Sri Lankan economy and has achieved remarkable success in terms of many vital parameters of corporate performance. Building on solid fundamentals the Company has recorded turnover growth in all its business units namely Metro Credit, Micro Finance, Gold Loans, Deposits/Savings and Easy Drive Transport solutions. In the year ended 31 March 2013 the Company has increased its Profit After Tax by 12% and it recorded as 511.11 Mn. Its NPL ratios are amongst the best in the industry.

Consonant with the broad vision of enabling financial inclusiveness and equitability of increase creation outside Western Province, Alliance Finance is now spearheading geographic expansion to fully exploit its core-competencies in the financial products and services. Customer centric corporate culture, Proprietary information processing and management capabilities, progressive and dynamic leadership reinforced by continuous management development, systems orientation in a positive organizational climate and contemporary management practices in all functional disciplines are amongst Alliance Finance Company’s industry level distinctive competencies.

As one of the pioneering organizations in the License Finance Companies sector, AFC is deeply committed to its vision. AFC believes that hands on leadership, deployment of a unique combination of resources and creative strategic thinking powered by innovation will enable the realization of its vision. This is further reinforced by relationships built on five decades of trust and core values and principles spanning over three generations that has enabled AFC achieving unparallel rates of re–investment in its deposit base.

The Company’s branch network has achieved considerable progress and competitive advantages stem from its differentiated positioning supported by carefully nurtured network of soft skills and functionally integrated resources. Strategic thinking at all management levels and encouragements of creative practices stimulate innovative solutions in solving financial problems of its diversified clientele and portfolios.


2.7 RISK ASSOCIATEDWITH THE FUTURE STRATEGIES

The Company adopts a comprehensive integrated risk management framework comprisingStrategic, Operational and Financial risks being surveyed and monitored constantly. Risk assessmentand management are considered items of high strategic and top‐management priority.

Given the fact that geographic expansion is the main thrust of the company’s future strategicdirection it is considered as an area of minimal risk, taking into account macro economicdevelopment taking place in the country outside the Western Province. Nevertheless AllianceFinance Company is an organization that places highest priority on safety and stability, risk isbeing viewed and considered on a verity of dimensions within a constant feedback, concurrent andfeed forward control systems.

2.8 SHAREHOLDING STRUCTURE

Top 10 Shareholders of the Company as at 31 August 2013Rank Name of Shareholder No of Shares %1 Mr. R. K. E. P. de Silva 640,075 26.342 Motor Services Station Pvt Ltd 295,164 12.153 Miss. D. M. E. P. Perera 258,132 10.624 Mr. J. E. P.A. de Silva 151,530 6.245 Mr. D. F. W. S. K. Perera 99,630 4.106 Orient Hotels Ltd 97,956 4.037 Mr. N. Amarasinghe 74,340 3.068 Mrs. S.E. Canekeratne 44,154 1.829 Mr. D.L.S.R. Perera 39,920 1.6410 Mrs. S.R. L. Mercelline 36,936 1.52

Top 10 Total Shareholding 1,737837 71.52

Other Shareholders 692,163 28.48Total Number of Shares 2,430,000 100.00


2.7 RISK ASSOCIATEDWITH THE FUTURE STRATEGIES

The Company adopts a comprehensive integrated risk management framework comprisingStrategic, Operational and Financial risks being surveyed and monitored constantly. Risk assessmentand management are considered items of high strategic and top‐management priority.

Given the fact that geographic expansion is the main thrust of the company’s future strategicdirection it is considered as an area of minimal risk, taking into account macro economicdevelopment taking place in the country outside the Western Province. Nevertheless AllianceFinance Company is an organization that places highest priority on safety and stability, risk isbeing viewed and considered on a verity of dimensions within a constant feedback, concurrent andfeed forward control systems.

2.8 SHAREHOLDING STRUCTURE

Top 10 Shareholders of the Company as at 31 August 2013Rank Name of Shareholder No of Shares %1 Mr. R. K. E. P. de Silva 640,075 26.342 Motor Services Station Pvt Ltd 295,164 12.153 Miss. D. M. E. P. Perera 258,132 10.624 Mr. J. E. P.A. de Silva 151,530 6.245 Mr. D. F. W. S. K. Perera 99,630 4.106 Orient Hotels Ltd 97,956 4.037 Mr. N. Amarasinghe 74,340 3.068 Mrs. S.E. Canekeratne 44,154 1.829 Mr. D.L.S.R. Perera 39,920 1.6410 Mrs. S.R. L. Mercelline 36,936 1.52

Top 10 Total Shareholding 1,737837 71.52

Other Shareholders 692,163 28.48Total Number of Shares 2,430,000 100.00




2.9 THE BOARD OF DIRECTORS AS AT DATE OF THIS INTRODUCTORY DOCUMENT

Name & Address Designation Experience/Professional Qualifications Other Directorships

Mr. Sunil Karunanayake 3, Shady Grove Avenue, Cotta Road, Colombo 08.

Chairman (Appointed on 01 June 2013)

Over 31 years experience in Commercial / Financial Management

Fellow Member of the Institute of Chartered Accountants of Sri Lanka (FCA)

Fellow Member of the Chartered Institute of Management Accountants UK (FCMA)

MBA from the Post-Graduate Institute of Management of the University of Sri Jayawardenapura

Non- Executive Director of Ceylon Grain Elevators PLC

Non- Executive Director of Orient Garments PLC

Non- Executive Director of

Three Acre Farms PLC

Non-Executive Director of Union Bank

Mr. Romani De Silva Windsor Towers, Appt. 7/5,81 Ward Place, Colombo 07.

Deputy Chairman & Managing Director

Counts over 29 years of experience in finance industries.

Fellow Member of the Institute of Credit Management (Sri Lanka).

Life Member of the Sri Lanka

Institute of Directors

Member of the Chamber of Young Lankan Entrepreneurs

Director of Alliance Tech Trading (Pvt) Ltd.

Director of Alliance Management Services (Pvt) Ltd.

Mr. D. L. S. R. Perera Orient Bungalow, Bandarawela

Finance Director Served on the Board for more than 31 years.

Fellow member of the Institute of Chartered Accountants.

Manages Family owned businesses.

Chairman & Managing Director of Orient Hotels Ltd.

Mrs. R. N. Ponnambalam 75, Dharmapala Mawatha, Colombo 07.

Non-Executive Director

Over 35 years of experience.

Managing Director of Macbertan (Pvt) Ltd.

Jt. Managing Director of Cars R Us (Pvt) Ltd.

Director of Hotel Services PLC (Hayleys Group)

Director of Mc Bolon Polymer (Pvt) Ltd

Amaya Leisure PLC


2.10 DIRECTORS’ REMUNERATION The aggregate emoluments paid by the Company to the Directors for the financial year ended 31 March 2013 was LKR 26.6 Million as set out in Note 45.1.1 of the Audited Financial Statements of the Company. 2.11 DIRECTORS’ INTERESTS The Directors’ direct and/or indirect interests in the transactions with the Company as at 31 March 2013 are set out in Note 45.1.2 and 45.1.3 of the Audited Financial Statements of the Company (Annexure III).

Lt Col (Retd) Athula R Samarasinghe No. 02, Nittawala Road, Kandy

Non-Executive Director

Over 26 years of experience.

MSc in Computer Science (Security) – 2011, University of Moratuwa Colombo Sri Lanka.

Bachelor’s degree in Information Technology, University of Colombo Sri Lanka.

Certified Ethical Hacker, EC Council USA.

Graduated of the Army Command & Staff College Course, Sri Lanka.

Diploma in Radio Electronics Nan Yang Institute Malaysia.

Unit Commanders’ Course,

Military College of Signals, India.

Company Commanders’ Course, Military College of Signals, India.

Cougar Net Communication, Recal College UK.

Young Officers’ Course, Military College of Signals, Pakistan.

Infantry Platoon Commanders Course Sri Lanka.

Officer Cadets’ Course Sri Lanka

Military Academy


Name & Address Designation Experience/ProfessionalQualifications

Other Directorships

Mr. Sunil Karunanayake

3, Shady Grove Avenue,Cotta Road,Colombo 08.

Chairman(Appointed on01 June 2013)

• Over 31 years experience inCommercial / FinancialManagement

• Fellow Member of the Institute ofChartered Accountants of SriLanka (FCA)

• Fellow Member of the CharteredInstitute of ManagementAccountants UK (FCMA)

• MBA from the Post‐GraduateInstitute of Management of theUniversity of SriJayawardenapura

• Non‐ Executive Director ofCeylon Grain Elevators PLC

• Non‐ Executive Director ofOrient Garments PLC

• Non‐ Executive Director ofThree Acre Farms PLC

• Non‐Executive Director ofUnion Bank

Mr. Romani De Silva

Windsor Towers,Appt. 7/5,81Ward Place,Colombo 07.

DeputyChairman &ManagingDirector

• Counts over 29 years ofexperience in finance industries.

• Fellow Member of the Institute ofCredit Management (Sri Lanka).

• Life Member of the Sri LankaInstitute of Directors

• Member of the Chamber of YoungLankan Entrepreneurs

• Director of Alliance TechTrading (Pvt) Ltd.

• Director of AllianceManagement Services (Pvt) Ltd.

Mr. D. L. S. R. Perera

Orient Bungalow,Bandarawela

Finance Director • Served on the Board for morethan 31 years.

• Fellow Member of the Institute ofChartered Accountants.

• Manages Family ownedbusinesses.

• Chairman & Managing Directorof Orient Hotels Ltd.

Mrs. R. N. Ponnambalam

75,Dharmapala Mawatha,Colombo 07.

Non‐ExecutiveDirector

• Over 35 years of experience. • Managing Director ofMacbertan (Pvt) Ltd.

• Jt. Managing Director of Cars RUs (Pvt) Ltd.

• Director of Hotel Services PLC(Hayleys Group)

• Director of Mc Bolon Polymer(Pvt) Ltd

• Amaya Leisure PLCLt Col (Retd) Athula RSamarasinghe

No. 02,Nittawala Road,Kandy

Non‐ExecutiveDirector

• Over 26 years of experience.

• MSc in Computer Science(Security) – 2011, University ofMoratuwa Colombo Sri Lanka.

• Bachelor’s degree in InformationTechnology, University ofColombo Sri Lanka.

• Certified Ethical Hacker, EC




None of the Directors held or hold any interest in any assets acquired, disposed or leased by the Company during the Two (02) years preceding this Debenture Issue and nor they have thus far proposed to have any interest in any assets proposed to be acquired, disposed or leased by the Company during the two (02) years succeeding the said Debenture Issue. 2.12 DIRECTORS’ SHAREHOLDING IN THE COMPANY Directors’ Shareholding in the Company as at 31 August 2013 is as follows.

No Name of Director No of Shares

1 Mr. S. Karunanayake 119

2 Mr. R. K. E. P. de Silva 640,075

3 Mr. D. L. S. R. Perera 39,920

4 Mrs. R. N. Ponnambalam 200

5 Mr. A. R. Samarasinghe 100 2.13 DIRECTORS’ INVOLVEMENT IN LITIGATION AND OFFENCES

No Director of the Company is or was, a) involved in any petition under any bankruptcy laws filed against such person or any partnership

in which he was a partner or any corporation of which he was an executive officer; b) Convicted for fraud, misappropriation or breach of trust or any other similar offence which the

CSE considers as a disqualification. c) the subject of any order, Judgment or ruling of any court of competent jurisdiction temporally

enjoining him from acting as an investment advisor, dealer in securities, director or employee of a financial institution and engaging in any business practice or activity.


2.15 SENIORMANAGEMENT

The Senior Management of AFC possesses extensive knowledge and skills with spread of businessexperience. Brief profiles of the Managing Director and Key Management of AFC are given below.

Name & Designation Tenor in theCompany Experience/Professional Qualifications

Mr. Romani De Silva

Deputy Chairman & ManagingDirector

29 yearsPlease refer the Managing Director’s profilementioned below

Mr. Suresh AmarasekaraChief Operating Officer

Over two years • Over 27 years’ experience.

• MBA International from Edith Cowan WesternAustralia.

• Advanced Diploma in Management Accountingfrom Chartered Institute of ManagementAccountants.

• Post Graduate Certificate in Asset and LiabilityManagement from PIM in University of SriJayawardenepura.

Mr. Chamindra De SilvaChief Financial Officer

Over two years • Experience over 35 years.

• MBA from University of Colombo

• Fellow Member of the Institute of CharteredAccountants from 1980

• Former Fellow Member of CIMA(UK) andACCA(UK) and Institute of Marketing andInstitute of Management services UK

• Former Vice-President of ACCA(UK) Sri Lankabranch and a member of the CIMA(UK) Sri Lankabranch

• Independent Director of Malwatte PlantationsPLC

• Former course director for FinancialManagement-University of Colombo

Mr. Michael BenedictAssistant General Manager(Metropolitan Financial

Over 12 years • Experience over 20 years.

• MBA from University of Wales UK




Assistant General Manager (Metropolitan Financial Services)

Member of Sri Lanka Institute of Marketing

(SLIM)

Mrs. Champa Nakandala Assistant General Manager (Deposit)

Over 26 years Experience over 28 years and has headed the Deposit Department for over 17 years.

Finalist AAT (London).

Mr. Pradeep De Silva Assistant General Manager (Gold Loan)

Over 5 years Experience over 22 years and has joined the Company from LB Finance, leading company in the LFC sector to successfully spearhead our Gold Loan division.

Mr. Darshan Silva Assistant General Manager (Regional Financial Services)

Over 4 years Experience over 22 years in the LFC sector

Chartered Institute of Management Accountants (UK) Finalist.

Diploma in Computer system Design with Distinction Pass (National Institute of Business Management Sri Lanka).

Registered Investment Analyst / Certificate in

capital Markets (FSA - Securities Exchange Commission of Sri Lanka).

Certificate in TOT in Micro Finance (Frankfurt

School of Management & Finance Germany).

Mr. Sujith Fernando Deputy Finance Controller

Over 11 years Experience over 15 years.

Fellow member of the Chartered Institute of Management Accountants (UK)

Chartered Global Management Accountant Diploma in Business Management from Institute

of Commercial Management (UK) Mr. Ali Ahlam Nawaz Group Head of Business Development

Over one year Over 16 years experience

Master in Business Management from Buckinghamshire, United Kingdom

BBA in Business Management (UK)

Member of the Sri Lanka Institute of Marketing

Member of American Marketing Association


Mr. Andrew SamuelHead of Micro Finance / ChiefContinuous ImprovementOfficer

RecentAppointee

• Over 19 years experience

• MBA from University of Peradeniya

• Fellow member of the Chartered Institute ofManagement Accountants (UK)

• Chartered Global Management Accountant

• Associate of the Institute of PlantationManagement

THEMANAGING DIRECTOR

Mr. Romani De Silva is the Deputy Chairman & the Managing Director of AFC.

A Fellow of the Institute of Credit Management, Sri Lanka, Mr. Romani de Silva holds Directorates in

several Companies and counts over 29 years’ experience in the Finance industry.

He pioneered the concept of Collaboration Financing designed to provide financing solutions for

competent entrepreneurs for business growth and expansion. This concept resulted in the Company

being awarded ISO 9001:1994 Certification for designing business –specific financial solutions. In

recognition of his innovation he was also presented with Bronze awards at the provincial and

national level at the Sri Lankan Entrepreneur of the year competition in 2001.

Mr. De Silva is a council member of the Finance Houses Association of Sri Lanka and actively

participates in the affairs of industry related institutions and associations.

Mr. De Silva is credited with implementing strategic initiatives resulting in the aggressive and

profitable growth of the Company in the recent past. Under his leadership, the Company has

emerged as a key competitor in the License Finance Company sector.

Being at the forefront in providing financial services to the three wheeler market at its incipient

stages a couple of decades ago, and being a keen advocate of the triple bottom line business

philosophy, he is now in the process of introducing a gas powered , environment friendly three

wheeler to the transport sector of Sri Lanka.




2.18 DEGREE OF DEPENDENCE ON KEY CUSTOMERS AND SUPPLIERS The Company adheres to prudential requirements set out by the Central Bank of Sri Lanka, by virtue of which exposure to any one group of companies, any one company and any individual borrower is regularly monitored. As such the Company is not overly dependent on any customer or any one sector for income at any given time. Alliance Finance is also not significantly dependent on any single supplier for its requirements.

2.19 CAPITAL STRUCTURE Stated Capital

As at 31 August 2013

Financial Year Ended 31 March

2013 2012 2011 No of

Ordinary Shares

LKR No of

Ordinary Shares

LKR No of

Ordinary Shares

LKR No of

Ordinary Shares

LKR

At the beginning of the Year

2,430,000 24,300,000 2,430,000 24,300,000 1,620,000 16,200,000 1,620,000 16,200,000

Issued during the year - - - - 810,000 8,100,000 - -

At the end of the year 2,430,000 24,300,000 2,430,000 24,300,000 2,430,000 24,300,000 1,620,000 16,200,000

Company issued 810,000 Shares on 13.10.2011 as Capitalization of Reserves at a rate of LKR

10/- per share.

There are no shares redeemed or re-purchased in terms of Sections 63,64,66,67,68,69,93 and 100 of the Companies Act No. 7 of 2007 or any reduction of Stated Capital in terms of Section 59 of the said Companies Act immediately preceding the two years of the date of this Introductory Document.

There are no Debentures of the same or another class subscribed or sold privately, in conjunction with the Listing of these Debentures and there are no convertible debt securities issued by the Company as at 31 August 2013

The Company’s Share Capital does not include any non voting, preference or any other class

of shares. .

The shares of the Company are freely transferable and transmittable through the CDS so long as the shares of the Company is listed on the CSE and the registration of such transfer shall not be subject to any restriction, save and except to the extent required for compliance with statutory requirements.


The Managing Director of the Company is not and was not,

• Involved in a petition under any bankruptcy laws filed against such person or any

partnership in which he was a partner or any corporation of which he was an Executive

Officer.

• Convicted for fraud, misappropriation or breach of trust or any other similar offence which

the CSE considers a disqualification.

2.16 REMUNERATION OF THE SENIOR MANAGEMENT

The aggregate emoluments, including salaries, allowances and bonus payments paid to the SeniorManagement team (excluding the Executive Directors) during the financial year ended 31 March2013 was LKR 36.7 Million as disclosed in Note 45.1.1 of the Audited Financial Statements of theCompany (Annexure III).

2.17 HUMAN RESOURCES

The Company has been growing steadily over the years and has shown significant growth during thelast few years due to several unique reasons and one of them being the highly educated, experiencedman power it possesses. At the end of March 2012 the Company had 794 staff and it was increasedup to 803 at the end of 31 August 2013.

Number of Employees as at 31 August 2013

The employees of the Company are not engaged in any labour union activities and there are nolabour unions or any significant agreements entered into between the Company and labour unionsas at 31 August 2013.

Category of Employees No of Employees

Senior Managers 14Managers 21Assistant Manager 59Senior Executives 79Executives 127Junior Executives 490Support staff 24Total Number of Employees 814




2.20 CORPORATE GOVERNANCE PRACTICES

Alliance Finance pursues a strategy of being in line with best practices in respect of CorporateGovernance and it is a vital element in enhancing the Company’s competitiveness and the financialgrowth. The company has formulated and implemented sustainability framework to maintain itsCorporate Governance in a high standard in the present competitive financial market.

The Board of Directors of AFC is responsible to attain and maintain the highest standard of corporategovernance to ensure the business integrity, greater transparency, accountability andprofessionalism in its business operations. The Company knows that complying with laws,regulations, policies, processes and procedures will improve the operational efficiency and also itwill enhance the brand image of the Company. The Code of Business Ethics established by theCompany provides guidance to its Directors, employees and other stakeholders to the practicesnecessary to maintain a good ethical behavior.

In keeping with the accepted principles of corporate governance, the office of the Chairman andManaging Director are kept separately to clearly segregate the balance of power and responsibility.The Chairman holds office in an independent non‐executive capacity and provides leadership andfacilitates effective discharge of Board functions. Further, good corporate governance is ensured bythe presence of respected individuals who function as Non‐Executive and Independent Directors onthe Board. The Non‐Executive Directors do not have any business interest that could materiallyinterfere with the exercise of their independent judgment.Non‐Executive Independent Directors of Alliance Finance Company PLC as at date of this documentare;

1. Mr. Sunil Karunanayake – Chairman of the Board

2. Mrs. Ramani N Ponnambalam, and

3. Mr. Athula R Samarasinghe

The Board has delegated appropriate authority to the management to implement the policies andstrategies approved by the Board. The performance is reviewed periodically with the performanceindicators and necessary actions taken accordingly.

As a Licensed Finance Company, AFC has endeavored to fulfill the requirements set out in the Rulesof corporate governance issued by the Colombo Stock Exchange and the Central Bank of Sri Lanka.

Audit Committee

The Audit Committee is responsible for ensuring the quality of financial reporting and relatedcommunication to the shareholders and the public as well as providing additional assurance on thereliability of the financial statements through a process of independent and objective review.


The Audit Committee comprises of Two (02) Independent Non‐Executive Directors and the BoardSecretary functions as the Secretary to the Committee. Present Audit Committee is headed by Mr.Sunil Karunananyake, who is a Fellow Member of Chartered Accountants of Sri Lanka with over 30years of extensive experience in finance, audit and related areas. Lt. Mr. Athula R. Samarasinghe isthe other Non‐Executive Director in the Audit Committee who has wealth of experience in thecommercial field.

Remuneration Committee

The Remuneration Committee is responsible for evaluating the performance of the ExecutiveDirectors and the Chief Executive Officer against the set targets and goals periodically anddetermining the basis for revising remuneration, benefits and other payments of performance basedincentives.

The Remuneration Committee consists of Three (3) Directors and Two (02) of them are IndependentNon‐Executive Directors. Members of the Remuneration Committee as at 31 August 2013 are asfollows.

1. Mrs. Ramani N Ponnambalam – Chairperson of the Committee (Non‐Executive Director)

2. Mr. Sunil Karunanayake ‐ Chairman of the Board

3. Lt Col. Athula R Samarasinghe (Non‐Executive Director)

Integrated Risk management Committee

As required by the Finance Leasing (Corporate Governance) Direction No. 4 of 2009, AFC hasappointed a Board sub‐committee for the management of risk.

The risk management committee consists of One (1) Independent Non‐Executive Director Mr. AthulaR Samarasinghe.

2.21 LITIGATION, DISPUTES AND CONTINGENT LIABILITIES

There are no material contingent liabilities or legal, arbitration or mediation proceedings pendingagainst the Company as at 30 September 2013 that would materially affect the current financialposition or future operations or profits of the Company.

The Company was not involved in any legal, arbitration or mediation proceedings in the recent pastwhich had any significant effects on the Company’s financial position or profitability.

As at 30 September 2013 there were no penalties imposed against the Company by any regulatory orstatutory authorities.




2.22 INSPECTION OF THE DOCUMENTS This Introductory Document, Articles of Association of the Company and the Trust Deed and the Addendum to the said Trust Deed shall be hosted in the Company’s website www.alliancefinance.lk and the website of the Colombo Stock Exchange www.cse.lk at least seven (07) market days prior to the submission of the Declaration referred to in Appendix 2D of the CSE Listing Rules until the date of maturity of the Debentures.

3.0 DECLARATIONS 3.1 Declaration by the Company

We, Alliance Finance Company PLC, of “Alliance House” No. 84, Ward Place, Colombo 07 hereby declare that to the best of our knowledge and belief the information contained in this Introductory document is true and correct in all material respects and that there are no other material facts, the omission of which would make any statement herein misleading.

The Common seal of Alliance Finance Company PLC is affixed hereto at Colombo on this ………… day of October 2013 in the presence of,

………………………………………… ………………………………………………

Director Director Name Name

3.0 DECLARATIONS




3.1 DECLARATION BY THE COMPANY

We, Alliance Finance Company PLC, of “Alliance House” No. 84, Ward Place, Colombo 07 herebydeclare that to the best of our knowledge and belief the information contained in thisIntroductory document is true and correct in all material respects and that there are no othermaterial facts, the omission of which would make any statement herein misleading.

The Common seal of Alliance Finance Company PLC is affixed hereto at Colombo on this 31st dayof October 2013 in the presence of,

Sgd Sgd

Director Director

R.K.E.P. de Silva D.L.S.R. Perera


3.2 DECLARATION BY THE DIRECTORS

12th November 2013

This Introductory Document has been seen and approved by us and we collectively and individuallyaccept full responsibility for the accuracy of the information given and confirm that after making allresponsible enquiries and to the best of our knowledge and belief, there are no other facts, theomission of which would make any statement herein misleading or inaccurate.

Name Designation Signature

Mr. Sunil Karunanayake Chairman Sgd

Mr. Romani Kumar Eardley Patrickde Silva

Deputy Chairman/Managing Director Sgd

Mr. Dissanayakage Lawrence StephenRohan Perera

Executive Director Sgd

Mrs. Ramani Nelun Ponnambalam Non- Executive Director Sgd

Lt Col. Athula Ranmal Samarasinghe Non- Executive Director Sgd



AUDITED FINANCIAL STATEMENTSFOR THE YEAR ENDED

31ST MARCH 2011

ANNEXURE I









Documents

INTRODUCTORY DOCUMENT · 2016-09-29 · 8 Allianc inanc ompan LC Allianc inanc ompan LC 9 Introductory Document Alliance Finance Company PLC - Debenture are to be listed via Introduction